Shares continued their declines and currencies fluctuated amid caution in markets as investors awaited highly anticipated US inflation data later Thursday.
(Bloomberg) — Shares continued their declines and currencies fluctuated amid caution in markets as investors awaited highly anticipated US inflation data later Thursday.
Stocks fell in Japan, Hong Kong and South Korea, along with European futures. US contracts fluctuated after a sixth consecutive decline for the S&P 500, which fell to the lowest level since November 2020.
The dollar held on to recent gains and the yen steadied near a fresh 24-year low that has put traders on watch for intervention from Japan.
Investors are on tenterhooks as they await consumer price figures that may determine if the Federal Reserve delivers a fourth-straight outsized hike in interest rates, piling more pressure on an already struggling world economy. Minutes released on Wednesday from the Fed’s last meeting suggested some officials considered reducing the pace of rate hikes, which triggered a brief surge on Wall Street that quickly unwound.
“The Fed is not going to blink,” James Ashley, head of international market strategy at Goldman Sachs Asset Management, said on Bloomberg Television. “If they’re going to make a mistake, they would far rather err on the side of being too hawkish.”
Yen traders prepared for a spike in volatility when the CPI report lands. The currency fell 2% minutes after last month’s release. The offshore yuan inched lower. Investors speculated that Chinese authorities are employing a tactic used in 2019 to steady the currency.
Japan’s benchmark 10-year bond traded for the first time in a week on Thursday about six hours after the market opened. The yield held at 0.245%, just below the upper end of the BOJ’s accepted range.
The pound declined slightly in Asia after a busy day of bond buying from the Bank of England, which reiterated the view that its emergency support for the gilt market would cease on Friday, contradicting a media report that suggested it could endure. UK pensions were found offloading assets around the world to shore up liquidity ahead of the move.
The Biden administration is considering adding aluminum to economic sanctions against Russia. Shares in Rusal, the Russian aluminum giant that has a listing in Hong Kong, fell sharply. Vladimir Putin said any energy infrastructure in the world is at risk after the explosions on the Nord Stream pipelines. Oil fell.
“The Fed needs data to start finding an off-ramp,” Carol Schleif, deputy chief investment officer at BMO Family Office, said on Bloomberg Television. “That’s a tough market to be in. Until we get a bunch more data, markets will have to figure out how to find their footing.”
Key events this week:
- Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
- US CPI, initial jobless claims, Thursday
- G-20 finance ministers and central bankers meet, Thursday
- China CPI, PPI, trade, Friday
- US retail sales, business inventories, University of Michigan consumer sentiment, Friday
- BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 were steady as of 6:58 a.m. London time. The S&P 500 fell 0.3%
- Futures on the Nasdaq 100 were little changed. The Nasdaq 100 fell 0.1%
- The Topix Index fell 0.7%
- The S&P/ASX 200 fell 0.1%
- The Hang Seng Index fell 1%
- The Shanghai Composite Index rose 0.1%
- Euro Stoxx 50 futures fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $0.9705
- The Japanese yen was little changed at 146.89 per dollar
- The offshore yuan fell 0.1% to 7.1830 per dollar
Cryptocurrencies
- Bitcoin fell 0.4% to $19,102.11
- Ether fell 0.8% to $1,288.58
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.91%
- Japan’s 10-year yield was at 0.245%
- Australia’s 10-year yield advanced six basis points to 4.00%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold fell 0.2% to $1,670.45 an ounce
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