US stock futures rose with European equities, rebounding from Tuesday’s heavy losses as investors awaited the Federal Reserve’s rate decision. Oil slid below $70.
(Bloomberg) — US stock futures rose with European equities, rebounding from Tuesday’s heavy losses as investors awaited the Federal Reserve’s rate decision. Oil slid below $70.
Contracts on the S&P 500 and the Nasdaq 100 advanced, with Eli Lilly & Co. rallying in premarket trading after positive results in the final-stage trial of its experimental drug for Alzheimer’s disease. US regional lenders PacWest Bancorp. and Western Alliance Bancorp. fluctuated after Tuesday’s selloff. Treasuries pared gains after a private report showed US companies added more jobs than forecast in April.
Across markets, trading was mixed as investors waited for clues from policymakers on the path of US rates. Crude futures dipped below $70 a barrel in New York as the prospect of a US recession threatened to curb fuel demand. European stocks rebounded.
Traders expect the Fed to raise borrowing costs by 25 basis points at today’s meeting, before signaling a pause in its aggressive hiking cycle.
“Despite contagion spreading across the regional bank space, we expect the Fed to squeeze in a final 25 basis point hike before pausing to assess the impact of the significant and rapid tightening to date,” Mizuho strategists Evelyne Gomez-Liechti and Helen Rodriguez wrote in a note.
Fed officials are caught between stubbornly high inflation and data pointing to an economic downturn, while concerns remain about financial strains stemming from the banking turmoil.
Multiple volatility halts in US regional lenders PacWest Bancorp and Western Alliance Bancorp unsettled Wall Street on Tuesday, just a day after JPMorgan Chase & Co.’s acquisition of First Republic Bank had seemed to bolster confidence in the sector.
Adding to the uncertain mood is a lack of clarity regarding the US debt ceiling. Between now and June 1 — the date by which the Treasury Department may run out of sufficient cash — President Joe Biden and members of the House and Senate are scheduled to be in town at the same time for one week to find a solution.
“It is a key event risk in the next few weeks and possibly a month or two,” Aninda Mitra, head of Asia macro and investment strategy at BNY Mellon Investment Management in Singapore, said on Bloomberg Television. “It feeds into our overall defensiveness, which we are advocating in our asset allocation recommendations to be long fixed income in this kind of an environment and underweight equities.”
Elsewhere, Advanced Micro Devices Inc. slipped after issuing a tepid outlook.
A gauge of Asian shares fell. Markets are shut in Japan and mainland China for holidays.
Key events this week:
- S&P Global US services PMI, US ISM services, Wednesday
- Fed Chair Jerome Powell holds news conference following rate decision, Wednesday
- US initial jobless claims, trade balance, Thursday
- European Central Bank rate decision, followed by ECB President Christine Lagarde’s news conference, Thursday
- US unemployment, nonfarm payrolls, Friday
Here are some of the main market moves:
Stocks
- S&P 500 futures rose 0.3% as of 8:21 a.m. New York time
- Nasdaq 100 futures rose 0.3%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 rose 0.5%
- The MSCI World index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.3% to $1.1036
- The British pound rose 0.3% to $1.2502
- The Japanese yen rose 0.6% to 135.79 per dollar
Cryptocurrencies
- Bitcoin fell 0.6% to $28,528.35
- Ether fell 0.6% to $1,858.73
Bonds
- The yield on 10-year Treasuries was little changed at 3.42%
- Germany’s 10-year yield was little changed at 2.26%
- Britain’s 10-year yield advanced two basis points to 3.69%
Commodities
- West Texas Intermediate crude fell 2.8% to $69.62 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson and Cecile Gutscher.
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