(Bloomberg) — An Asian stock gauge may rebound Thursday from the lowest level since 2020, helped by a plunge in oil that eased some concerns about high inflation and contributed to a drop in bond yields.
(Bloomberg) — An Asian stock gauge may rebound Thursday from the lowest level since 2020, helped by a plunge in oil that eased some concerns about high inflation and contributed to a drop in bond yields.
Futures gained for Japan, Australia and Hong Kong. US contracts were steady after the S&P 500 and the Nasdaq 100 advanced the most in about a month. Product launches including the iPhone 14 bolstered Apple Inc.
Treasuries climbed Wednesday, lowering the 10-year yield to 3.26%, as the drop in crude turned the spotlight on the possibility of cooling price pressures. Oil traded at about $82 a barrel, sapped by demand risks from a wave of monetary tightening and China’s Covid and property-sector travails.
A dollar gauge eased from a record. Greenback strength has rattled currencies including the yen and the pound, which earlier hit the lowest level since 1985.
Central banks are walking a tightrope, raising interest rates sharply to tackle inflation while remaining leery of sparking a damaging economic contraction in the process. The uncertainty is whipsawing markets and has saddled equities and bonds with steep losses this year.
“The stock market has rallied several times even as the bond market has shown lots of negative volatility and the dollar continues to creep up,” Federated Hermes Senior Equity Strategist Linda Duessel said on Bloomberg Television. “You have to wonder when can we expect a sustained rally here or to think we are out of the woods.”
Fed officials reiterated their determination to get inflation under control. Vice Chair Lael Brainard said interest rates will need to rise to restrictive levels, while cautioning risks would become more two-sided in the future. Chair Jerome Powell is due to speak on Thursday.
Monetary policy has tightened further with rate hikes in Canada and Australia this week. The European Central Bank takes center stage later Thursday — Bloomberg Economics predicts a 75 basis points increase to front-load tightening even as the region grapples with an energy crisis.
The Fed’s Beige Book report said US economic expansion prospects were weak and set to slump further over the next year, while adding that price growth showed signs of decelerating.
What to watch this week:
- European Central Bank rate decision, Thursday
- Fed Chair Jerome Powell due to speak, Thursday
- Chicago Fed President Charles Evans and his Minneapolis counterpart Neel Kashkari due to speak, Thursday
- EU energy ministers extraordinary meeting on emergency intervention in electricity markets, Friday
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Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 7.28 a.m. in Tokyo. The S&P 500 rose 1.8%
- Nasdaq 100 futures increased 0.1%. The Nasdaq 100 rose 2.1%
- Nikkei 225 futures rose 0.8%
- Australia’s S&P/ASX 200 Index futures added 0.4%
- Hang Seng Index futures gained 0.4%
Currencies
- The Bloomberg Dollar Spot Index was steady
- The euro was at $1.0009
- The Japanese yen was at 143.96 per dollar, down 0.2%
- The offshore yuan was at 6.9591 per dollar
Bonds
- The yield on 10-year Treasuries declined nine basis points to 3.26%
Commodities
- West Texas Intermediate crude fell 0.1% to $81.84 a barrel
- Gold was at $1,717.89 an ounce
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