US equity futures crept higher and European stocks rose as investors parsed comments from Federal Reserve officials for clues on the pace of interest rate hikes and assessed the impact of China’s widening Covid lockdowns.
(Bloomberg) — US equity futures crept higher and European stocks rose as investors parsed comments from Federal Reserve officials for clues on the pace of interest rate hikes and assessed the impact of China’s widening Covid lockdowns.
Contracts on the S&P 500 and the Nasdaq 100 gained about 0.2%.
In US premarket trading, Zoom Video Communications Inc. fell after reporting slower sales and trimming its full-year revenue forecast. The Stoxx Europe 600 Index was buoyed by rallying energy stocks, with oil majors Shell Plc and BP Plc outperforming.
The dollar weakened against all major currencies and Treasury yields declined.
Crude oil prices rose after Saudi Arabia pushed back against reports of a potential OPEC+ production increase.
Fed officials have broadly maintained their steadfast stance to fight against inflation.
Yet San Francisco Fed President Mary Daly also said that officials need to be mindful of the lags in the transmission of policy changes, while her Cleveland counterpart Loretta Mester said she’s open to slowing the tempo of rate hikes.
“Markets get jittery whenever the Federal Reserve is due to speak or issue important information,” said Russ Mould, investment director at AJ Bell.
“With the central bank set to publish the minutes from its November meeting tomorrow, equity investors need to brace themselves for the Fed to say it is likely to keep raising rates to tame inflation, even though October’s consumer prices figure was below expectations.”
Meanwhile, the OECD said the world’s central banks must continue to raise interest rates to fight soaring and pervasive inflation, even as the global economy sinks into a significant slowdown.
The unexpected surge in prices and its impact on real incomes is hurting people everywhere, creating problems that will only worsen if policymakers fail to act, the Paris-based organization said.
In Asian trading on Tuesday, Hong Kong stocks slid as China’s daily virus infections climbed to near the highest on record.
Covid-control restrictions now affect a fifth of China’s economy. Chinese stocks listed in the US fell in premarket New York trading.
Still, the eventual easing by China of its curbs to counter the virus are likely to mean that European profits will hold up relatively well because of the benefits to luxury and mining companies, according to strategists at Goldman Sachs Group Inc.
The team led by Sharon Bell said earnings will probably only decline about 8% in 2023, a small drop compared with the 30% contraction seen in a typical recession.
They had previously forecast a 10% decline in profits next year.
Elsewhere on Tuesday, gold rose on the weaker dollar. Cryptocurrency prices were mixed, with investors braced for more ructions as further digital-asset sector bankruptcies loom following the demise of Sam Bankman-Fried’s FTX empire.
Key events this week:
- US Richmond Fed manufacturing index, Tuesday
- OECD releases Economic Outlook, Tuesday
- Fed’s Loretta Mester and James Bullard speak, Tuesday
- S&P Global PMIs: US, Euro area, UK, Wednesday
- US MBA mortgage applications, durable goods, initial jobless claims, University of Michigan sentiment, new home sales, Wednesday
- Minutes of the Federal Reserve’s Nov.
1-2 meeting, Wednesday
- ECB publishes account of its October policy meeting, Thursday
- US stock and bond markets are closed for the Thanksgiving holiday, Thursday
- US stock and bond markets close early, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.2% as of 7:49 a.m.
New York time
- Futures on the Nasdaq 100 rose 0.2%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 rose 0.4%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.2% to $1.0262
- The British pound rose 0.5% to $1.1883
- The Japanese yen rose 0.6% to 141.29 per dollar
Cryptocurrencies
- Bitcoin rose 1% to $15,789.14
- Ether was little changed at $1,094.44
Bonds
- The yield on 10-year Treasuries declined three basis points to 3.80%
- Germany’s 10-year yield advanced one basis point to 2.01%
- Britain’s 10-year yield was little changed at 3.19%
Commodities
- West Texas Intermediate crude rose 1.5% to $81.25 a barrel
- Gold futures rose 0.5% to $1,763.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar and Sagarika Jaisinghani.
More stories like this are available on bloomberg.com
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