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US futures, Asia stocks rise as rate path mulled: markets wrap

Gold was at $1 860.33 an ounce, down 0.3%.
Image: Kiyoshi Ota/Bloomberg

Futures climbed and most Asian stocks pushed higher Wednesday, while Treasury yields stabilised after a sharp retreat as markets assessed the outlook for Federal Reserve monetary tightening. The dollar gained.

An MSCI Inc. gauge of Asia-Pacific shares rose, though moves were muted throughout the region. US futures advanced after stocks fell overnight, with the Nasdaq 100 down more than 2% as Snap Inc.’s profit warning pummeled companies that rely on digital advertising. European contracts also climbed.

Treasuries steadied after a flight to havens sent yields lower, while traders dialed back the expected pace of Fed hikes. The Fed minutes from its last meeting, due Wednesday, may provide some clarity.

New Zealand’s central bank raised interest rates by half a percentage point for a second straight meeting and forecast more aggressive hikes to come to tame inflation. Meanwhile, the European Central Bank is in the midst of a debate over how aggressive it should act to rein in inflation.

Investors are fretting growth will slow dramatically amid tighter monetary conditions to tamp down surging inflation, with the war in Ukraine and China’s lockdowns adding pressure by choking supply chains. There are already signs of softer US growth. Fed Bank of Atlanta President Raphael Bostic, who’s one of the central bank’s dovish policy makers, urged his colleagues to proceed with care.

“If we are really at that point now where the Fed is delivering on what’s priced in, which is determinant on inflation not surprising further, we think that might start to cool some concerns about this continued repricing higher of Fed rates and of course the impact on growth,” Manpreet Gill, Standard Chartered Private Bank head of FICC investment strategy, said on Bloomberg Television. “That gives up a bit of room for optimism.”

In China, the country’s strict Covid policy is outweighing broad measures to support growth and keeping investors wary. The nation’s central bank and banking regulator urged lenders to boost loans in the latest effort to shore up the battered economy.

Meanwhile, Russia will get pushed closer to a potential default after the US Treasury Department said it will let a key sanctions waiver benefiting American investors expire.

Here are some key events to watch this week:

  • FOMC minutes Wednesday
  • ECB publishes its Financial Stability Review Wednesday
  • Bank of Korea rate decision Thursday
  • US GDP, initial jobless claims Thursday
  • US core PCE price index; personal income and spending; wholesale inventories; University of Michigan consumer sentiment Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.5% as of 7:02 a.m. in London. The S&P 500 fell 0.8%
  • Nasdaq 100 futures rose 0.7%. The Nasdaq 100 fell 2.2%
  • Japan’s Topix index fell 0.1%
  • Australia’s S&P/ASX 200 Index gained 0.6%
  • Kospi index was up 0.6%
  • Hang Seng Index rose 0.3%
  • Shanghai Composite Index rose 1%
  • Euro Stoxx 50 futures rose 0.8%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%
  • The Japanese yen was at 127.02 per dollar, down 0.2%
  • The offshore yuan was at 6.6805 per dollar, down 0.3%
  • The euro fell 0.3% to $1.0706

Bonds

  • The yield on 10-year Treasuries was at 2.75%
  • Australia’s 10-year bond yield fell seven basis points to 3.25%

Commodities

  • West Texas Intermediate crude rose 0.9% to $110.80 a barrel
  • Gold was at $1 860.33 an ounce, down 0.3%
© 2022 Bloomberg

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