US equity futures and an Asian stock gauge rose Wednesday in a hiatus from the selloff triggered by the Federal Reserve’s preference for restrictive monetary settings to tackle inflation.
(Bloomberg) — US equity futures and an Asian stock gauge rose Wednesday in a hiatus from the selloff triggered by the Federal Reserve’s preference for restrictive monetary settings to tackle inflation.
The regional index climbed about 0.4% in a mixed day that saw tech shares advance but Japan’s bourses retreat.
BYD Co. plunged in Hong Kong after Warren Buffett’s Berkshire Hathaway Inc. trimmed its stake in the electric vehicle maker.
Traders were evaluating the latest Chinese data, which indicated factory activity shrank for a second month.
Power shortages, a property sector crisis and Covid outbreaks all took a toll.
S&P 500, Nasdaq 100 and European contracts pushed higher. Wall Street shares on Tuesday hit a one-month low — robust US labor demand and consumer confidence data added to the case for sharp interest-rate hikes to tackle inflation.
Fed officials reiterated their determination to curb price pressures.
A dollar gauge declined and Treasuries were steady. A deepening yield curve inversion points to fears that the Fed will trigger a recession.
Oil pared a slide but was still headed for a third monthly drop — the longest losing run in more than two years — hampered by the likelihood of slower global growth.
Market bets on a shallower trajectory for Fed tightening are receding, raising the prospect of more losses for stocks and bonds in an already difficult year.
Investors are scouring incoming data for clues on the policy path, with August US jobs figures on Friday the next key report.
“What’s clear is that predicting this market is not clean cut,” Angeline Newman, a managing director at UBS Global Wealth Management, said on Bloomberg Television.
“We are living in a world where conflicting economic signals are making the path of monetary policy very difficult to determine.”
Fed officials again stressed their commitment to defeating inflation while remaining vague on how big their policy move will be next month.
New York Fed chief John Williams said rates will need to be held in restrictive territory for “some time,” adding that this meant through 2023 — the latest official to push back on financial-market expectations of cuts later next year.
“We’re still going to see some pretty volatile times and maybe some further downside for equities in the short term,” Steve Brice, chief investment officer at Standard Chartered Wealth Management, said on Bloomberg Television.
Investors are also contending with a European energy crisis as well as mounting friction between Beijing and Taipei after Taiwanese soldiers fired shots to ward off civilian drones.
Here are some key events to watch this week:
- ECB Governing Council members due to speak at event Tuesday through Sept.
2
- Euro-area CPI, Wednesday
- Russia’s Gazprom set to halt Nord Stream pipeline gas flows for three days of maintenance, Wednesday
- Cleveland Fed President Loretta Mester due to speak, Wednesday
- China Caixin manufacturing PMI, Thursday
- US nonfarm payrolls, Friday
- UK leadership ballot closes Friday.
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Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.7% as of 7 a.m.
in London. The S&P 500 fell 1.1%
- Nasdaq 100 futures added 0.8%. The Nasdaq 100 fell 1.1%
- Japan’s Topix index fell 0.3%
- Australia’s S&P/ASX 200 index dropped 0.2%
- South Korea’s Kospi index rose 0.7%
- Hong Kong’s Hang Seng Index gained 0.6%
- China’s Shanghai Composite Index lost 0.3%
- Euro Stoxx 50 futures increased 0.6%
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro traded at $1.0040, up 0.2%
- The Japanese yen was at 138.42 per dollar, up 0.3%
- The offshore yuan was at 6.8973 per dollar, up 0.4%
Bonds
- The yield on 10-year Treasuries rose held at 3.10%
- Australia’s 10-year bond yield fell about one basis point to 3.59%
Commodities
- West Texas Intermediate crude was at $92.44 a barrel, up 0.9%
- Gold was at $1,724.73 an ounce
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