Asian stocks were mixed while US and European equity futures inched higher Monday as investors awaited interest rate decisions this week from the US, Europe, China and Japan. A gauge of dollar strength was steady and Treasury yields were little changed.
(Bloomberg) — Asian stocks were mixed while US and European equity futures inched higher Monday as investors awaited interest rate decisions this week from the US, Europe, China and Japan. A gauge of dollar strength was steady and Treasury yields were little changed.
Japan’s Topix index rose 0.4%, while Hong Kong’s benchmark slipped 0.6% and markets in Australia were closed for a holiday. Futures for Euro Stoxx 50 climbed 0.4% and contracts for the S&P 500 added 0.1% after the underlying index crept further into bull-market territory on Friday.
Concerns over growth in China remain, while technology shares have continued to climb in the US amid bets the Federal Reserve is nearing the end of its hiking cycle.
“The Chinese economy is really a story of a crisis of confidence right now,” Meera Pandit, global market strategist at JPMorgan Asset Management, said on Bloomberg Radio. “We really need to see lawmakers and then policymakers infuse some sort of fiscal stimulus to help that confidence story.”
Bloomberg Economics is among a minority of forecasters that see the People’s Bank of China cutting its medium-term lending facility on Thursday. Positioning in rates markets suggests one more Fed hike, with the likelihood that the move comes next month rather than this Wednesday.
Treasury yields rose one basis point for both the two-year and the 10-year maturities.
In currency markets, an index of the dollar was steady, as was the yen. The offshore yuan slipped about 0.1% versus the greenback.
“The main focus this coming week will be on the US core CPI and thereafter the FOMC, where our economics team expects a ‘hawkish pause’ from the Fed,” Nomura Holdings Inc. analysts including Chetan Seth wrote in a note. With the market mostly pricing in a hike by July, they don’t see a negative impact for stocks beyond “any initial knee-jerk negative reaction.”
While the consensus is for the Fed to pause this week, there is also concern that its ten hikes in the current cycle have done damage, and this has bond managers including Fidelity International to Allianz Global Investors forecasting an economic downturn.
Unexpected hikes last week from the Bank of Canada and the Reserve Bank of Australia have added an extra element of uncertainty to markets. The European Central Bank is projected to lift its benchmark rate Thursday and the Bank of Japan is expected to stand pat on Friday.
Oil extended losses amid persistent concerns around the demand outlook as Goldman Sachs Group Inc. cut its price forecast again. Brent traded below $75 a barrel and West Texas Intermediate was below $70. Gold fell.
Key events this week:
- US CPI, Tuesday
- FOMC begins two-day meeting, Tuesday
- Eurozone industrial production, Wednesday
- US PPI, Wednesday
- FOMC rate decision, Wednesday
- IEA oil market report released, Wednesday
- China central bank meeting to decide on one-year policy loan rate, Thursday
- China property prices, retail sales, industrial production, Thursday
- ECB rate decision, Thursday
- US initial jobless claims, retail sales, empire manufacturing, business inventories, industrial production
- Eurozone CPI, Friday
- Japan BOJ rate decision, Friday
- US University of Michigan consumer sentiment, Friday
Some of the major moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 1:09 p.m. Tokyo time. The S&P 500 rose 0.1% Friday
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 0.3% Friday
- Euro Stoxx 50 futures rose 0.4%
- Japan’s Topix index rose 0.4%
- Hong Kong’s Hang Seng Index fell 0.6%
- China’s Shanghai Composite Index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0741
- The Japanese yen was little changed at 139.41 per dollar
- The offshore yuan fell 0.1% to 7.1523 per dollar
- The Australian dollar was little changed at $0.6744
Cryptocurrencies
- Bitcoin fell 1.3% to $25,791.65
- Ether fell 2% to $1,735.95
Bonds
- The yield on 10-year Treasuries advanced one basis point to 3.75%
- Japan’s 10-year yield was unchanged at 0.420%
Commodities
- West Texas Intermediate crude fell 1.1% to $69.41 a barrel
- Spot gold fell 0.2% to $1,958.14 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Ishika Mookerjee.
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