(Bloomberg) — Asian stocks and U.S. futures fluctuated Tuesday ahead of a key inflation print stateside that’s expected to strengthen the case for tighter monetary policy.
Shares slipped in Japan, edged up in Hong Kong and were little changed in China. S&P 500 contracts swung between gains and losses after the benchmark posted its longest losing streak since September, though dip buyers emerged late in the session to wipe out almost all intraday losses.
Treasuries were steady, while Australian and Japanese bonds gained after recent losses. On Monday, the U.S. yield curve flattened as market-implied odds of a March rate hike edged higher. The dollar slipped.
A key measure of U.S. inflation — set to be released Wednesday — is anticipated to have increased further in December, putting additional pressure on the central bank to tighten policy.
Investors are mulling the impact of a withdrawal of unprecedented stimulus and the spread of omicron virus that continues to pressure already buckling supply chains and add to inflationary pressures. A drop in liquidity has sparked a rotation out of pricey growth stocks into laggard value names.
“It’s very well embedded now that inflation in many parts of the world won’t be transitory, that there still are some supply-chain issues that will linger,” Kerry Craig, JPMorgan Asset Management global market strategist, said on Bloomberg Television. “That does mean central banks are pretty keen to get onto the tightening path.”
Federal Reserve Chair Jerome Powell said the U.S. economy was expanding at a fast pace and the central bank will prevent higher inflation from becoming entrenched. In remarks for his Senate confirmation hearing, he also cautioned that the post-pandemic economy might look different than the previous expansion.
Helping sentiment, New York’s virus infections may have reached a peak, about a month after the first case of the omicron variant was identified there. Meanwhile, Pfizer Inc. is developing a hybrid vaccine that shields against the omicron variant. A new study showed high levels of protective immune cells that fight some common colds also made people less likely to contract Covid-19.
Elsewhere, Bitcoin recovered to around $42,000 after dipping below $40,000, putting it on track for its worst start to a year since the earliest days of digital currencies. Oil edged up.
Here are some key events this week:
- Fed Chair Jerome Powell’s confirmation hearing in the Senate Banking Committee on Tuesday.
- Kansas City Fed President Esther George and St. Louis Fed President James Bullard speak on Tuesday.
- EIA crude oil inventory report on Wednesday.
- China PPI, CPI on Wednesday.
- U.S. CPI, Fed Beige Book on Wednesday.
- U.S. initial jobless claims, PPI on Thursday.
- U.S. Senate Banking Committee hearing for Lael Brainard, nominated as Fed vice-chair on Thursday.
- Richmond Fed President Thomas Barkin, Philadelphia Fed President Patrick Harker,
- Chicago Fed President Charles Evans speak on Thursday.
- Bank of Korea policy decision and briefing on Friday.
- Wells Fargo, Citigroup, JPMorgan due to report earnings on Friday.
- U.S. business inventories, industrial production, University of Michigan consumer sentiment, retail sales on Friday.
- New York Fed President John Williams speaks Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 1:20 p.m. in Tokyo. The S&P 500 fell 0.1%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.1%
- Topix index fell 0.6%
- Australia’s S&P/ASX 200 Index fell 0.7%
- Kospi index was little changed
- Hang Seng Index rose 0.4%
- Shanghai Composite Index was little changed
- Euro Stoxx 50 futures added 0.6%
Currencies
- The Japanese yen was at 115.34 per dollar
- The offshore yuan was at 6.3779 per dollar
- The Bloomberg Dollar Spot Index slipped 0.1%
- The euro traded at $1.1338
Bonds
- The yield on 10-year Treasuries was at 1.77%
- Australia’s 10-year bond yield fell two basis points to 1.90%
Commodities
- West Texas Intermediate crude rose 0.6% to $78.71 a barrel
- Gold was at $1,805.80 an ounce, up 0.2%
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