(Bloomberg) — US stock futures climbed on Wednesday as some of the investor anxiety over tense US-China ties eased, while Treasuries extended a slide sparked by hawkish Federal Reserve comments. Oil rose as OPEC+ members agreed to a small production increase.
S&P 500 and Nasdaq 100 contracts both rose by about 0.6%. In New York premarket trading, Airbnb Inc. fell after the home-rental company missed estimates on bookings. Match Group Inc. dropped after the parent to dating apps including Tinder gave a weak revenue forecast. PayPal Holdings Inc. jumped as the payments giant said activist investor Elliott Investment Management is now among its biggest shareholders.
US House Speaker Nancy Pelosi left Taiwan after a visit that has provoked an angry response from China, with markets calmer compared with the wave of anxiety that washed across assets ahead of her arrival. A dollar gauge was little changed.
The two-year Treasury yield added to its advance beyond 3% as bonds continued a selloff sparked on Tuesday by Fed officials indicating the central bank has some way to go to curb inflation. That lead traders to trim wagers on policy easing in 2023.
While an immediate concern around US-China tensions may be fading Wednesday, investors still face a host of worries including inflation and how the policy response by central banks to surging prices could hobble global growth. Equities trading doesn’t reflect the headwinds confronting the market, according to Goldman Sachs Group Inc. strategist Sharon Bell.
“There’s a little bit of complacency in there and markets are not fully taking into account the risks,” Bell said in an interview with Bloomberg TV.
Europe’s Stoxx 600 was little changed as traders assessed the latest company earnings. BMW AG sank as the carmaker flagged softening demand, while Societe Generale SA rallied after the French lender outlined new revenue targets. MSCI Inc.’s Asia-Pacific equity index slipped 0.2% in a mixed day that included a jump in Chinese technology shares.
Fed Signals
Meanwhile, comments from Fed officials including Mary Daly, Loretta Mester, Charles Evans and James Bullard served to highlight a challenging backdrop of rising borrowing costs, price pressures and slowing economic growth.
San Francisco Fed President Daly said the Fed has “a long way to go” on reaching price stability around a 2% inflation target. Cleveland counterpart Mester said she wants to see “very compelling evidence” that month-to-month price increases are moderating.
St Louis Fed President Bullard said in a CNBC interview Wednesday there would have to be “convincing evidence” of inflation easing before policy makers would be able to “feel like we’re doing enough.”
Elsewhere, oil rose above $95 a barrel as OPEC+ ministers agreed to a 100,000 barrels a day production increase for September, giving a tight market extra supplies at a much slower pace than recent months. Gold spot prices climbed and Bitcoin gained above $23,000.
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What to watch this week:
- OPEC+ meeting on output, Wednesday
- US factory orders, durable goods, ISM services, Wednesday
- BOE rate decision, Thursday
- US initial jobless claims, trade, Thursday
- Cleveland Fed President Loretta Mester due to speak, Thursday
- US employment report for July, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.6% as of 8:15 a.m. New York time
- Futures on the Nasdaq 100 rose 0.6%
- Futures on the Dow Jones Industrial Average rose 0.5%
- The Stoxx Europe 600 rose 0.3%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.2% to $1.0187
- The British pound rose 0.1% to $1.2183
- The Japanese yen fell 0.4% to 133.67 per dollar
Bonds
- The yield on 10-year Treasuries advanced four basis points to 2.79%
- Germany’s 10-year yield advanced seven basis points to 0.89%
- Britain’s 10-year yield advanced six basis points to 1.93%
Commodities
- West Texas Intermediate crude rose 1.6% to $95.96 a barrel
- Gold futures fell 0.5% to $1,780.70 an ounce
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