Asian stocks are poised for a cautious start following their worst sell-off in two weeks after US equities rebounded as investors weigh the prospect of large interest rate hikes by the Federal Reserve. The dollar fell.
(Bloomberg) — Asian stocks are poised for a cautious start following their worst sell-off in two weeks after US equities rebounded as investors weigh the prospect of large interest rate hikes by the Federal Reserve. The dollar fell.
Asian equity futures signal gains ahead in Japan while Australian and Hong Kong stocks look set for mixed opens. US contracts edged higher after the S&P 500 closed in the green as dip-buyers emerged late in the session.
The subdued tone comes as data showed US producer prices fell for a second month, providing some relief after the jolt from consumer-price figures that prompted investors to ratchet up wagers for rate increases. Retail sales due Thursday and University of Michigan readings Friday will be parsed for clues on the strength of the economy and inflation expectations.
Swaps traders are pricing in a hike of three-quarters of a percentage point when the Fed meets next week, with some wagers appearing for a full-point move. The rise in rate-sensitive Treasuries on Wednesday deepened the curve inversion — a harbinger for a looming recession — to a level unseen this century.
Read More: US 2- to 30-Year Curve Reaches Most Inverted Level This Century
While the magnitude of the stock rout was impressive following hot US inflation data, the S&P 500 only reversed most of the gains made in the previous four sessions. The lack of a surge in the VIX index — known as the “fear gauge” — suggests that the selloff was a recalibration of those expectations rather than panic selling.
Natural gas futures surged the most among major US-traded commodities as hot weather forecasts and a looming rail strike added to concern about tight supplies ahead of winter.
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Here are some key events to watch this week:
- US business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
- China home sales, retail sales, industrial production, fixed assets, surveyed jobless rate, Friday
- Euro area CPI, Friday
- US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures contracts rose 0.2% as of 7:31 a.m. in Tokyo. The underlying gauge rose 0.3% on Wednesday
- Nasdaq 100 futures rose 0.2% after a gain of 0.8% for the index
- S&P/ASX 200 futures contracts rose 0.1%
- Nikkei 225 futures contracts increased 0.4%
- Hang Seng Index futures were little changed
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $0.9982
- The yen was steady at 143.04 per dollar
- The offshore yuan traded at 6.9721 versus the dollar
Bonds
- The yield on 10-year Treasuries was little changed at 3.4%
Commodities
- West Texas Intermediate crude rose 0.6% to $88.97 a barrel
- Gold was $1,697.16 an ounce
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