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Stocks steady, futures rise as policy woe eases: markets wrap

Treasuries fell.
Image: Qilai Shen/Bloomberg

Stocks were steady and US equity futures rose Wednesday after comments from the Federal Reserve eased investor concerns that faster inflation would spur policy tightening. Treasuries fell.

The Stoxx Europe 600 Index was little changed, with gains in cyclical sectors such as miners and energy shares offsetting a drop in defensives. Contracts on all three US equity benchmarks climbed, after two days of gains for the S&P 500 Index. An advance in Asian equities was moderated by a drop in Japanese stocks.

A dollar gauge edged higher. Oil climbed above $73 a barrel after data signaling another decline in US crude stockpiles added to a bullish outlook.

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Markets are steadying this week after last week’s volatility spurred by the Fed’s hawkish tilt at its meeting. Chair Jerome Powell on Tuesday said the central bank would be patient in waiting to lift borrowing costs, and reiterated that while price increases are bigger than expected, they will likely wane.

The Fed’s shift last week to acknowledge higher inflation and pull forward its rate hike projections is “a reflection of more positive longer-term dynamics,” BlackRock Investment Institute strategists led by Jean Boivin wrote in a report. “We believe the Fed’s new outlook will not translate into significantly higher policy rates any time soon. This, combined with the powerful restart, underpins our pro-risk stance.”

Elsewhere, commodities including copper and iron ore climbed. Bitcoin rebounded, rising past $30 000. The currencies of Australia and New Zealand retreated as the countries stepped up coronavirus curbs. Sydney will impose new restrictions to fight the Delta variant, while Wellington will move to a higher alert level.

Here are some events to watch this week:

  • US new home sales, current account balance on Wednesday
  • EIA crude oil inventory report due Wednesday
  • Bank of England interest rate decision Thursday
  • The Fed releases Thursday the results of stress tests on the largest U.S. banks

These are some of the main moves in financial markets:

Stocks

  • The Stoxx Europe 600 was little changed as of 8:20 a.m. London time
  • Futures on the S&P 500 rose 0.2%
  • Futures on the Nasdaq 100 rose 0.1%
  • Futures on the Dow Jones Industrial Average rose 0.3%
  • The MSCI Asia Pacific Index rose 0.3%
  • The MSCI Emerging Markets Index rose 1%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro fell 0.1% to $1.1923
  • The Japanese yen fell 0.2% to 110.89 per dollar
  • The offshore yuan fell 0.1% to 6.4883 per dollar
  • The British pound rose 0.2% to $1.3974

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 1.48%
  • Germany’s 10-year yield was little changed at -0.16%
  • Britain’s 10-year yield advanced one basis point to 0.79%

Commodities

  • Brent crude rose 0.7% to $75.30 a barrel
  • Spot gold was little changed
© 2021 Bloomberg

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