(Bloomberg) — Stocks fell in Asia and US equity futures pared gains as traders assessed prospects for earnings growth against a backdrop of rising interest rates. The dollar inched higher.
(Bloomberg) — Stocks fell in Asia and US equity futures pared gains as traders assessed prospects for earnings growth against a backdrop of rising interest rates. The dollar inched higher.
An Asia Pacific share gauge fell, led by declines in technology shares in Hong Kong, where heavyweights including Alibaba Group Holding Ltd. and Tencent Holdings Ltd. dropped.
US equity futures erased some of their earlier gains, though are still pointing toward another positive session after the delivery of some solid results Tuesday from companies including Netflix Inc., which reported a surge in subscribers.
The pound fell after UK consumer prices rose 10.1% in September from a year earlier, matching a 40-year high reached in July. The euro slipped.
Treasury yields held near multi-year highs before the publication of US housing data for September and the Fed’s Beige Book. The yield on the 10-year hit 4.03%.
In Japan, authorities continued their jawboning of the yen, with Finance Minister Shunichi Suzuki saying he is increasing the frequency of monitoring foreign-exchange markets. The currency hovered above 149 per dollar.
Read: Yen Traders on Intervention Alert as Japan Keeps Guard
Upbeat company results, cheaper valuations and UK policy reversals have helped buoy risk appetite. The sentiment on stocks and global growth among fund managers surveyed by Bank of America Corp. shows full capitulation, opening the way for equities to bottom in the first half of 2023.
Despite the optimism, Terry Sandven, chief equity strategist at US Bank Wealth Management, warned that challenges remain. “Analysts’ consensus earnings projections remain subject to downward revision,” he wrote in a note. “Inflationary trends, hawkish Fed commentary, and a slower earnings growth pace in 2023 are key contributors weighing on investor sentiment and equity prices.”
Some regional Fed directors last month favored raising a key interest rate by a smaller or larger amount than the 75 basis points that policy makers ultimately decided was needed to curb persistent inflation, according to minutes of discount-rate meetings released Tuesday.
“Everyone wants to know when the Fed will stop raising the funds rate,” Jeff Schulze, investment strategist at ClearBridge Investments, wrote in a note. “Regardless of what the Fed does from here, if the bond yield shows signs of ignoring the Fed’s next rate hike and brushing off any tough talk of more to come, investors may want to increase exposure to the stock market.”
Read: Fed’s Bostic Says Slowing Inflation Best for Long-Run Employment
Oil climbed from a two-week low on concern that the European Union’s latest sanctions on Russian fuel could exacerbate the market tightness that the US is trying to alleviate with additional sales. The Biden administration will announce Wednesday a plan to release 15 million barrels from US emergency oil reserves in an effort to ease high gasoline prices.
Elsewhere, gold declined and Bitcoin traded around $19,300.
Key events this week:
- Euro area CPI, Wednesday
- EIA crude oil inventory report, Wednesday
- US MBA mortgage applications, building permits, housing starts, Fed Beige Book, Wednesday
- Fed’s Neel Kashkari, Charles Evans, James Bullard speak, Wednesday
- US existing home sales, initial jobless claims, Conference Board leading index, Thursday
- Euro area consumer confidence, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.5% as of 7:16 a.m. London time
- Futures on the Nasdaq 100 rose 0.8%
- Futures on the Dow Jones Industrial Average rose 0.3%
- The MSCI Asia Pacific Index fell 0.5%
- The MSCI Emerging Markets Index fell 0.8%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.2% to $0.9837
- The Japanese yen was little changed at 149.33 per dollar
- The offshore yuan fell 0.2% to 7.2386 per dollar
- The British pound fell 0.2% to $1.1299
Cryptocurrencies
- Bitcoin fell 0.5% to $19,273.76
- Ether fell 0.9% to $1,302.7
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.04%
- Germany’s 10-year yield advanced two basis points to 2.28%
- Britain’s 10-year yield declined three basis points to 3.95%
Commodities
- Brent crude rose 0.1% to $90.14 a barrel
- Spot gold fell 0.4% to $1,645.93 an ounce
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