European stock futures posted small gains and Treasury yields held declines as investors weighed weak factory data against inflation concerns from OPEC+’s plan to cut oil output.
(Bloomberg) — European stock futures posted small gains and Treasury yields held declines as investors weighed weak factory data against inflation concerns from OPEC+’s plan to cut oil output.
The two-year Treasury yields steadied at around 3.97% Tuesday after being at the center of the action in the US hours when they swung from sharp gains to close lower.
Yields on Australia’s policy-sensitive three-year government bond dropped about eight basis points following the central bank’s decision to pause its almost yearlong tightening cycle amid signs of moderating inflation and uncertainty over the economic outlook.
Euro Stoxx 50 futures rose 0.3% and the euro was little changed as investors awaited data on producer prices that are projected to show continued month-on-month weakness.
In Asia, declines in Chinese technology stocks pulled MSCI Inc.’s Asia-Pacific benchmark down about 0.3%, even with gains in Japan and Australia. Contracts for US indexes retreated slightly following a mixed session Monday on Wall Street.
A gauge of greenback strength edged up after a decline on Monday.
In the US, Federal Reserve Bank of St. Louis President James Bullard told Bloomberg Television that OPEC+’s decision to cut output was unexpected and an increase in oil prices could make the Fed’s job of lowering inflation more challenging. “Whether it will have a lasting impact I think is an open question,” he said.
As the possibility of a recession looks more likely, the upcoming earnings season may be the first of challenging quarters.
JPMorgan Chase & Co. strategist Marko Kolanovic reiterated the bank’s underweight call on equities in a note to clients, warning that “stocks are set to weaken for the remainder of the year” as headwinds from banking turbulence, oil shocks, and slowing growth linger.
Meanwhile, the Hong Kong Monetary Authority bought the local dollar for the first time since mid-February after the currency slid past the weak end of its trading band. South Korean inflation eased more than expected in March, reducing pressure on the central bank to resume policy tightening and helping the Kospi stock gauge to rise.
Further into the week, the US government’s monthly employment report will be released Friday and will give a fuller picture of the job market. Swaps linked to Fed interest-rate expectations showed a quarter-point hike in May as more likely than not.
“I would lean in the direction that over the course of the second half of the year, the Fed is going to have to turn more supportive,” Stephen Gallo, global FX strategist at BMO Capital Markets, said on Bloomberg Television. “Maybe not with easing in Q3, which is there’s a chance of that priced in right now by the rates market, but probably turning a bit more supportive, at least with its language.”
In commodities, West Texas Intermediate advanced toward $81 a barrel and Brent moved past $85 after both rallied more than 6% on Monday. Gold traded lower.
Key events this week:
- Eurozone PPI, Tuesday
- US factory orders, US durable goods, Tuesday
- Cleveland Fed President Loretta Mester speaks, Tuesday
- Eurozone S&P Global Eurozone Services PMI, Wednesday
- US trade, Wednesday
- UBS annual general meeting, Wednesday
- US initial jobless claims, Thursday
- St. Louis Fed President James Bullard speaks, Thursday
- US unemployment, nonfarm payrolls, Friday
- Good Friday. US stock markets closed, bond markets close for part of the day
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 7:00 a.m. London time. The S&P 500 rose 0.4%
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 fell 0.3%
- Euro Stoxx 50 futures rose 0.3%
- Japan’s Topix index rose 0.3%
- Hong Kong’s Hang Seng Index fell 0.9%
- China’s Shanghai Composite Index rose 0.2%
- Australia’s S&P/ASX 200 Index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro was little changed at $1.0889
- The Japanese yen fell 0.3% to 132.89 per dollar
- The offshore yuan fell 0.1% to 6.8863 per dollar
- The Australian dollar fell 0.4% to $0.6762
- The British pound was little changed at $1.2402
Cryptocurrencies
- Bitcoin rose 1.2% to $27,910.75
- Ether rose 1.7% to $1,810.54
Bonds
- The yield on 10-year Treasuries advanced one basis point to 3.42%
- Japan’s 10-year yield advanced one basis point to 0.375%
- Australia’s 10-year yield declined six basis points to 3.27%
Commodities
- West Texas Intermediate crude rose 0.4% to $80.78 a barrel
- Spot gold fell 0.3% to $1,978.42 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth and Jason Scott.
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