US equity futures pointed to a recovery after a five-day rout sparked by concerns that the Federal Reserve will remain hawkish in the face of economic headwinds.
(Bloomberg) — US equity futures pointed to a recovery after a five-day rout sparked by concerns that the Federal Reserve will remain hawkish in the face of economic headwinds.
Contracts on the S&P 500 ticked higher after the underlying benchmark posted the longest stretch of down days to begin a month since 2011. Futures on the Nasdaq 100 edged higher. European equities extended a four-day slide, with property and telecommunications firms pacing declines even as energy companies and miners gained.
Treasuries halted a rally that had sent the 10-year yield to an almost three-month low as investors braced for an economic downturn. The benchmark added three basis points to yield 3.44%, while a gauge of the dollar was little changed.
Traders now await Friday’s US producer price report and the Consumer Price Index print to get a read on how effective Fed policy has been to quell inflation, and whether the central bank will be able to notch down its aggressive campaign.
Strategists from Morgan Stanley to JPMorgan Chase & Co. have warned investors against piling back into risk on hopes the Fed is getting close to pivoting to easier policy. Belief in a dovish turn, reinforced in part by Fed officials themselves, sparked a 14% surge in the S&P 500 over seven weeks.
“Presumably if the Fed is pivoting this time around, it’s not for a good reason. It’s a deteriorating fundamental picture,” Joyce Chang, chair of global research at JPMorgan, said in an interview with Bloomberg TV Thursday. “I mean, is that really a reason to be buying risk? I think it’s premature to say that there is a Fed pivot.”
Elsewhere in markets, oil rose after a four-day drop as investors weighed the impact of China’s moves to ease virus curbs against a looming US slowdown.
Key events this week:
- ECB President Christine Lagarde speaks, Thursday
- US initial jobless claims, Thursday
- China PPI, aggregate financing, money supply, new yuan loans, Friday
- US PPI, wholesale inventories, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.3% as of 6:52 a.m. New York time
- Futures on the Nasdaq 100 rose 0.3%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 fell 0.3%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0510
- The British pound fell 0.3% to $1.2169
- The Japanese yen fell 0.1% to 136.77 per dollar
Cryptocurrencies
- Bitcoin was little changed at $16,832.23
- Ether rose 0.5% to $1,238.77
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.44%
- Germany’s 10-year yield was little changed at 1.79%
- Britain’s 10-year yield advanced one basis point to 3.06%
Commodities
- West Texas Intermediate crude rose 1.6% to $73.14 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
