Stocks dip, US futures waver amid edgy sentiment: markets wrap

Gold was at $1 878.38 an ounce, up 0.4%.
Image: Kiyoshi Ota/Bloomberg

Asian stocks slipped in choppy trading Tuesday as traders parsed geopolitical risks and worries about Federal Reserve policy tightening. Chinese shares outperformed on central bank steps to aid economic growth.

An Asia-Pacific share gauge fell for a third session. China bucked the trend after its central bank undertook a cash injection to support expansion. S&P 500 and Nasdaq 100 futures erased earlier gains and European contracts retreated.

Treasury yields edged down amid a flatter curve signaling concerns that looming Fed interest-rate hikes could choke economic growth. The ebb and flow of haven demand due to the Russia-Ukraine standoff has also whipsawed bonds. The yen rose and gold touched an eight-month high.

The European tensions are still keeping oil markets on edge. West Texas Intermediate crude inched lower but remained around $95 a barrel after earlier scaling that mark for the first time since 2014.

Elsewhere in commodities, iron ore futures tumbled by some 10% in Singapore on China’s push to rein in prices. Australia, one the material’s major exporters, saw its currency slide.

Diplomatic efforts are continuing to defuse the Ukraine situation. While US officials have warned a Russian invasion of Ukraine may be imminent, Moscow has repeatedly denied that one is planned. Before the crisis flared, markets were already nervous over high inflation and the withdrawal of Fed stimulus.

“What we are seeing is a Fed that is reacting to inflationary prints even though many of the pressures on inflation are factors that the Fed really can’t solve,” Kristina Hooper, chief global market strategist at Invesco, said on Bloomberg Television. “So that certainly increases the risks and reduces the clarity.”

Fed officials came out with another round of views on the policy outlook. Fed Bank of St. Louis President James Bullard said the monetary authority needs to move forward its plans to raise rates to underline its inflation-fighting credibility.

Fed Bank of Kansas City President Esther George said the central bank should take a systematic approach to removing policy accommodation but be careful to not “oversteer.”

Here are some key events this week:

  • US PPI, Tuesday
  • EIA crude oil inventory report, Wednesday
  • FOMC minutes, Wednesday
  • China CPI, PPI, Wednesday
  • G-20 finance ministers, central bank governors meet, Thursday through Feb. 18
  • Cleveland Fed President Loretta Mester, St. Louis Fed President James Bullard speak, Thursday
  • US Monetary Policy Forum: speakers including Fed officials Charles Evans, Christopher Waller and Lael Brainard, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.2% as of 6 a.m. in London. The S&P 500 fell 0.4%
  • Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 0.1%
  • Japan’s Topix index fell 0.9%
  • Australia’s S&P/ASX 200 Index fell 0.5%
  • South Korea’s Kospi index fell 1.2%
  • Hong Kong’s Hang Seng Index lost 1.2%
  • China’s Shanghai Composite Index rose 0.2%
  • Euro Stoxx 50 futures lost 0.4%

Currencies

  • The Japanese yen was at 115.32 per dollar, up 0.2%
  • The offshore yuan was at 6.3566 per dollar
  • The Bloomberg Dollar Spot Index dipped 0.1%
  • The euro was at $1.1319, up 0.1%

Bonds

  • The yield on 10-year Treasuries fell one basis point to 1.97%
  • Australia’s 10-year bond yield rose five basis points to 2.19%

Commodities

  • West Texas Intermediate crude fell 0.6% to $94.92 a barrel
  • Gold was at $1 878.38 an ounce, up 0.4%
© 2022 Bloomberg

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