Stocks struggled for direction while the dollar edged higher as hawkish comments from central bankers that point to more interest rate hikes maintained a cautious tone in markets.
(Bloomberg) — Stocks struggled for direction while the dollar edged higher as hawkish comments from central bankers that point to more interest rate hikes maintained a cautious tone in markets.
Encouraging earnings updates did offer some positive news for investors concerned about the outlook for the economy. Renault SA rallied after the French car maker upgraded its full-year earnings guidance, thanks to strong sales momentum from new models. Hennes & Mauritz AB climbed after the Swedish retailer reported a smaller-than-expected decline in earnings as it cut costs and made progress reducing its inventory buildup.
Overall, major equity indexes were broadly steady, with US futures little changed and Europe’s Stoxx 600 flat. A measure of Asian equities slid in lackluster trading.
A gauge of greenback strength was higher for a second day after Federal Reserve Chair Jerome Powell said Thursday at least two interest-rate increases are likely necessary this year to bring the inflation rate down to the US central bank’s 2% target. European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey have also said this week they have a ways to go in reining in hot price increases.
Treasury yields rose across the curve.
Worst Performers of 2023 Look to China for Relief: Taking Stock
Investors continue to debate the outlook for US equities and how well the economy will hold up under elevated interest rates. Strength in US consumer confidence and home sales buoyed stocks earlier in the week.
“Economic surprise was really one of the key reasons why US equities were doing so well over the last few months,” Daniel Lam, head of equity strategy for Standard Chartered Wealth Management, said on Bloomberg Television. “But if the hurdle gets higher and higher, becomes harder to beat, investors may be rotating into other regions such as Japan and Asia.”
After the close of US trading Wednesday, Bank of America Corp. and Wells Fargo & Co. led gains in financial companies as the biggest lenders passed the Fed’s annual stress test, clearing the way for payouts.
Elsewhere in Asian markets, the offshore yuan slipped about 0.3%, even as China stepped in to support the currency for a third time this week through a stronger-than-expected setting of its daily reference rate.
The yen bumped up and down versus the dollar as traders weighed comments from Bank of Japan Governor Kazuo Ueda. He struck a dovish tone Wednesday on the short-term outlook for monetary settings while indicating it might be possible to start normalizing policy if he becomes confident in a pick-up in inflation for next year.
Key events this week:
- Eurozone economic confidence, consumer confidence, Thursday
- US GDP, initial jobless claims, Thursday
- Atlanta Fed President Rafael Bostic speaks, Thursday
- China manufacturing PMI, non-manufacturing PMI, balance of payments, Friday
- US personal income and spending, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 was little changed as of 8:20 a.m. London time
- S&P 500 futures were little changed
- Nasdaq 100 futures were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index fell 0.4%
- The MSCI Emerging Markets Index fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0917
- The Japanese yen was little changed at 144.60 per dollar
- The offshore yuan fell 0.1% to 7.2522 per dollar
- The British pound was little changed at $1.2642
Cryptocurrencies
- Bitcoin rose 0.8% to $30,356.63
- Ether rose 0.7% to $1,844.75
Bonds
- The yield on 10-year Treasuries advanced four basis points to 3.74%
- Germany’s 10-year yield advanced four basis points to 2.36%
- Britain’s 10-year yield advanced two basis points to 4.33%
Commodities
- Brent crude fell 0.3% to $73.79 a barrel
- Spot gold fell 0.1% to $1,905.11 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Catherine Bosley.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.