Global markets traded mixed Wednesday, with risk-taking tempered by disappointing data out of China, inflation numbers awaited in Europe and deadlocked talks in Washington.
(Bloomberg) — Global markets traded mixed Wednesday, with risk-taking tempered by disappointing data out of China, inflation numbers awaited in Europe and deadlocked talks in Washington.
US stock futures ticked higher as White House and congressional negotiators continued to try to breach an impasse to raise the debt ceiling. Treasuries steadied after Tuesday’s selloff. European stocks opened lower ahead of a read on Eurozone inflation that will help shape bets on the rate-hiking cycle.
Anxiety that leaders in Washington will be unable to stave off a historic default before the June 1 deadline have sent both stocks and bonds into a tailspin. Yields rose across the US curve Tuesday, with the rate on 30-year notes climbing to around 3.9% — the highest since the turmoil affecting regional banks that erupted in early March.
Negotiators are seeking a framework agreement to review upon President Joe Biden’s return from a truncated trip to Asia.
Any breakthrough in the talks would give markets cause to rally, dissipating one of the biggest tail risks weighing on sentiment, according to Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
“While the looming uncertainty makes the markets hard to navigate in the short run, there is a good chance that the drama comes to an end within the next few days,” she said in an email. “In this scenario, we shall see a relief rally across risk assets.”
Japan stocks led gains in Asia, with the Topix index advancing for a fourth day to reach a fresh high since August 1990. The Nikkei 225 index was set to breach a key 30,000 level with the nation on the cusp of a rare bull market, according to Goldman Sachs.
The offshore yuan, meanwhile, fell to as weak as 7.0162 to the US currency, the first time it has breached the 7 level since late December.
A slew of weaker-than-expected data from China, from industrial output to retail sales and home prices, has raised concerns over the ability the world’s second biggest economy to bounce back from the pandemic.
Elsewhere, oil ticked lower amid China’s lackluster recovery that overshadowed a bullish outlook from the International Energy Agency and positive US data. Gold remained below $2,000.
Key events this week:
- Eurozone CPI, Wednesday
- BOE Governor Andrew Bailey delivers keynote speech, Wednesday
- US housing starts, Wednesday
- US initial jobless claims, Conference Board leading index, existing home sales, Thursday
- Japan CPI, Friday
- ECB President Christine Lagarde participates in panel at Brazil central bank conference, Friday
- New York Fed’s John Williams speaks at monetary policy research conference in Washington; Fed Chair Jerome Powell and former chair Ben Bernanke to take part in panel discussion, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 fell 0.2% as of 8:12 a.m. London time
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 0.2%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The MSCI Asia Pacific Index fell 0.1%
- The MSCI Emerging Markets Index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0863
- The Japanese yen fell 0.3% to 136.79 per dollar
- The offshore yuan fell 0.1% to 7.0068 per dollar
- The British pound fell 0.2% to $1.2467
Cryptocurrencies
- Bitcoin rose 0.3% to $27,036.16
- Ether was little changed at $1,821.33
Bonds
- The yield on 10-year Treasuries was little changed at 3.54%
- Germany’s 10-year yield declined one basis point to 2.34%
- Britain’s 10-year yield was little changed at 3.81%
Commodities
- Brent crude fell 0.7% to $74.38 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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