(Bloomberg) — US equity futures ticked higher Friday and an Asian equity gauge was little changed as investors assessed the outlook for Federal Reserve interest-rate hikes and the latest readings on China’s economy.
S&P 500, Nasdaq 100 and European contracts rose as Asian shares pared losses and after Wall Street came off Thursday lows to close with a small loss.
Alibaba Group Holding Ltd. contributed to a slide in China tech. Speculation that the firm faces a data-theft probe reignited worries about regulatory obstacles.
China’s second-quarter growth slowed on Covid lockdowns but consumption rallied in June as curbs eased. Officials refrained from injecting funds into the banking system and left borrowing costs unchanged.
Treasuries edged up and the the yield curve between two-year and 10-year maturities remained inverted, something viewed as recession signal. The Bloomberg Dollar Spot Index hovered near a record high. Oil is poised to end the week below $100 a barrel for the first time since April.
Traders are weighing up how hawkish the Fed must be to curb inflation. Bets on a one-percentage-point July rate hike have been scaled back after the latest commentary pointed toward 75 basis points. Ebbing liquidity threatens to stir more market volatility after steep losses for stocks and bonds in 2022.
“We need liquidity to dry up in order to reduce inflation,” Erin Gibbs, chief investment officer at Main Street Asset Management, said on Bloomberg Radio. “It’s a challenge, it’s a difficult situation, transition. I don’t envy the Federal Reserve, but we’ve known there has been too much money out there and that’s why we’re here in this position.”
In the latest Fed comments, Governor Christopher Waller backed raising rates by 75 basis points this month, though he said he could go bigger if warranted by the data. St. Louis Fed President James Bullard echoed some of those comments, saying he favored hiking by the same amount.
Meanwhile about $1.9 trillion of options are set to expire Friday, a event that could bring some volatility to markets.
What to watch this week:
- US business inventories, industrial production, University of Michigan consumer sentiment, Empire manufacturing, retail sales, Friday
- G-20 finance ministers, central bankers meet in Bali, from Friday
- Atlanta Fed President Raphael Bostic speaks, Friday
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Some of the main moves in markets:
Stocks
- S&P 500 futures rose 034% as of 1:38 p.m. in Tokyo. The S&P 500 fell 0.3%
- Nasdaq 100 futures rose 0.4%. The Nasdaq 100 rose 0.3%
- Japan’s Topix index was up 0.1%
- South Korea’s Kospi index added 0.2%
- Australia’s S&P/ASX 200 index fell 0.7%
- China’s Shanghai Composite index lost 0.2%
- Hong Kong’s Hang Seng index declined 1.2%
- Euro Stoxx 50 futures added 1.2%
Currencies
- The Bloomberg Dollar Spot Index was steady
- The euro was at $1.0028, up 0.1%
- The Japanese yen was at 139.02 per dollar, down 0.1%
- The offshore yuan was at 6.7756 per dollar, down 0.2%
Bonds
- The yield on 10-year Treasuries dropped two basis points to 2.94%
- Australia’s 10-year yield was at 3.41%
Commodities
- West Texas Intermediate crude was at $96.44 a barrel, up 0.7%
- Gold was at $1,709.46 an ounce, down 0.1%
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