US equity futures rose Friday and Asian stocks were mixed as investors evaluated the economic outlook amid moderating oil prices, tightening Federal Reserve monetary policy and Russia’s war in Ukraine.
A turnaround in China helped an Asia-Pacific share index pull away from session lows but wasn’t enough to drag the gauge out of the red. S&P 500 and Nasdaq 100 contracts made modest gains, while Europe’s fluctuated. Stocks are coming off their worst quarter since the pandemic bear market.
Oil retreated below $100 a barrel on a move by the US to release 1 million barrels a day for six months from reserves to tackle rising energy costs. Russia’s invasion has disrupted commodity flows, stoking fuel and food prices.
Treasuries dipped and the curve between two-year and 10-year yields remained close to inverting, a pattern that signals worries about an economic downturn if the Fed uses aggressive interest-rate hikes to damp high inflation.
The yen was the worst performer in the Group-of-10 basket, while a dollar gauge advanced. US payrolls figures later Friday may underline the case for Fed tightening, reinforcing a divergence with Japan’s dovish monetary settings that’s weighed on the latter’s currency.
Investors begin a new quarter wondering if the fighting in Ukraine, the isolation of Russia and the Fed’s increasingly hawkish turn will engender still more volatility and losses for stocks and bonds. Raw materials are the only key asset class to deliver major gains so far in 2022.
Downgraded growth outlooks in the US, Europe and China are “something to watch very carefully,” Anwiti Bahuguna, head of multi-asset strategy at Columbia Threadneedle Investments, said on Bloomberg Television. “There are very few places to hide these days in the multi-asset space,” though commodities are a good spot because of inflation and geopolitics, she added.
The latest data showed Asia’s manufacturing resurgence faltered in March, hampered by worsening supply shortages and soaring costs. In the US, the personal consumption expenditures price index — which the Fed uses for its inflation target — increased 6.4%, the most since 1982.
Talks between Ukraine and Russia are set to resume Friday, according to a Ukrainian official. President Vladimir Putin said Russia aims to keep supplying gas to European customers even as it demands they shift to payment in rubles.
The Russian government has so far stayed current on its debt obligations. JPMorgan Chase & Co. Thursday processed a nearly $447 million payment for dollar debt due in 2030. Another deadline is approaching on April 4.
European Union leaders plan to tell President Xi Jinping in a virtual summit that China will hurt its global stature if it hands Russia an economic or military lifeline.
Some key events to watch this week:
- US jobs report, Friday
Some of the main moves in markets:
- S&P 500 futures rose 0.2% as of 7:06 a.m. in London. The S&P 500 fell 1.6%
- Nasdaq 100 futures added 0.3%. The Nasdaq 100 fell 1.6%
- Japan’s Topix index fell 0.1%
- South Korea’s Kospi index shed 0.7%
- Australia’s S&P/ASX 200 index declined 0.1%
- China’s Shanghai Composite index added 0.9%
- Hong Kong Hang Seng’s index slid 0.7%
- Euro Stoxx 50 futures fell 0.2%
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was at $1.1065
- The Japanese yen was at 122.29 per dollar, down 0.5%
- The offshore yuan was at 6.3592 per dollar
- The yield on 10-year Treasuries rose four basis points to 2.37%
- Australia’s 10-year bond yield was at 2.83%
- West Texas Intermediate crude fell 1.3% to $99.01 a barrel
- Gold was at $1 938.15 an ounce