Stocks Tread Water After Fed, Before China Data: Markets Wrap

Asian stocks and US equity futures were little changed Thursday after the Federal Reserve paused its monetary tightening, and ahead of a torrent of news on the state of China’s economy.

(Bloomberg) — Asian stocks and US equity futures were little changed Thursday after the Federal Reserve paused its monetary tightening, and ahead of a torrent of news on the state of China’s economy. 

Japanese equities fell slightly while Australia’s benchmark and US contracts ticked higher. The dollar inched lower and Treasuries were steady.

The S&P 500 gained just 0.1% on Wednesday after Fed chief Jerome Powell said nearly all Fed officials expected it would be appropriate to raise interest rates “somewhat further” in 2023. The Nasdaq 100 rose 0.7%, bringing its gain since the start of the year to 37%.

With a pause and hawkish outlook from the Fed widely anticipated, focus in the Asian trading session is set to swing to China, which will release retail sales and industrial output figures that are expected to show further slowing in the country’s sputtering recovery. Ahead of the data, the People’s Bank of China is projected to cut its one-year medium-term lending facility rate as part of broader stimulus efforts to support real estate and domestic demand.

“The skip was expected, but I think markets are left a little confused on the dot plot and Powell’s commentary,” said Brendan McKenna, emerging markets economist and currency strategist at Wells Fargo. “We may need some clarification in the near future, and until we get that, Asia may trade a bit sideways for the time being.”

Economic troubles in New Zealand were also rippling through markets Thursday, with the nation’s sovereign bond yields falling after gross domestic product data showed the country fell into a recession in the first quarter following an aggressive run of policy tightening.

Australian 10-year yields declined, mirroring a drop in long-dated Treasuries Wednesday. 

In corporate news, Advanced Micro Devices Inc. rallied as the chipmaker showed off its planned line of artificial intelligence processors. Nvidia Corp. hit an all-time high, extending this year’s surge. Tesla Inc. fell, snapping its record-setting 13-day winning streak. UnitedHealth Group Inc. slumped after an executive said a recent increase in surgeries and other medical care might push expenses higher than anticipated.

Key events this week:

  • China property prices, retail sales, industrial production, Thursday
  • European Central Bank President Christine Lagarde holds press conference following the rate decision, Thursday
  • US initial jobless claims, retail sales, empire manufacturing, business inventories, industrial production, Thursday
  • Bank of Japan rate decision, Friday
  • US University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.1% as of 9:26 a.m. Tokyo time. The S&P 500 rose 0.1%
  • Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 0.7%
  • Hang Seng futures rose 1.4%
  • Japan’s Topix was little changed
  • Australia’s S&P/ASX 200 rose 0.5%
  • Euro Stoxx 50 futures fell 0.2%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0840
  • The Japanese yen was little changed at 140.12 per dollar
  • The offshore yuan was little changed at 7.1744 per dollar
  • The Australian dollar was little changed at $0.6797

Cryptocurrencies

  • Bitcoin rose 0.8% to $25,126.35
  • Ether rose 0.8% to $1,651.45

Bonds

  • The yield on 10-year Treasuries was little changed at 3.79%
  • Australia’s 10-year yield declined two basis points to 3.96%

Commodities

  • West Texas Intermediate crude rose 0.4% to $68.54 a barrel
  • Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rita Nazareth.

More stories like this are available on bloomberg.com

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