US equity futures edged up and Asian stocks were mixed Wednesday after markets dipped overnight on a technology selloff and Treasury Secretary Janet Yellen’s comments on interest rates. The dollar held gains.
S&P 500 contracts rose after a climb in the commodity, financial and industrial sectors helped the gauge pare losses. Nasdaq 100 futures steadied following a weaker close for the index amid declines in Apple Inc., Tesla Inc. and Amazon.com Inc. European futures advanced. Australian shares rose and Hong Kong dropped. A number of key Asian markets were shut for holidays.
Yellen said rates will likely rise as government spending ramps up and the economy responds with faster growth — comments that economists regarded as self-evident. In a subsequent interview, the former Federal Reserve Chair said she wasn’t predicting or recommending rate hikes.
Commodities reached their highest levels in almost a decade as the rebound from the pandemic fuels demand. Copper traded around $10 000 a ton and oil topped $66 a barrel. New Zealand’s dollar outperformed all its Group-of-10 peers on a strong jobs report. Benchmark 10-year Treasury yields inched up.
The debate on whether government spending could spur excessive inflation comes as stock valuations hover near the highest levels in two decades. Investors have been reluctant to push rallies further despite robust corporate earnings. While the Fed has assured markets that interest rates will remain at current lows throughout the recovery, strengthening data have raised concerns that policy makers may move to tighten sooner than anticipated.
“The market’s focus will still be on growth restoration and how Covid develops over time,” said Cecilia Chan, HSBC Asset Management Asia-Pacific chief investment officer, on Bloomberg Television. She downplayed concerns about inflation and added that “the central bank will remain dovish.”
Meanwhile, India continues to face a devastating Covid-19 wave. The nation’s stocks and bonds gained after the central bank approved 500 billion rupees ($6.8 billion) of liquidity to banks to support lending to vaccine makers, hospitals and providers of health services.
Here are some key events to watch this week:
- US ADP employment change is due Wednesday.
- Chicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College on Wednesday. Cleveland Fed President Loretta Mester gives a virtual speech to the Boston Economic Club.
- Bank of England rate decision Thursday.
- The April U.S. employment report is released on Friday.
These are some of the main moves in markets:
- S&P 500 futures rose 0.2% as of 7:38 a.m. in London. The S&P 500 Index lost 0.7%
- Nasdaq 100 contracts added less than 0.1% after the index fell 1.9%
- Australia’s S&P/ASX 200 increased 0.4%
- Hong Kong’s Hang Seng Index dropped 0.5%
- Euro Stoxx 50 futures added 0.9%
- The Japanese yen traded at 109.42 per dollar
- The offshore yuan was at 6.4889 per dollar
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro traded at $1.2006
- The yield on 10-year Treasuries rose about one basis point to 1.60%
- Australia’s 10-year bond yield fell two basis points to 1.74%
- West Texas Intermediate crude rose 0.8% to $66.21 a barrel
- Gold was down 0.1% to $1 776.77 an ounce