European and US stock futures fluctuated in narrow ranges Thursday while the dollar rose as traders continued to parse hawkish comments from central bankers that point to more rate hikes.
(Bloomberg) — European and US stock futures fluctuated in narrow ranges Thursday while the dollar rose as traders continued to parse hawkish comments from central bankers that point to more rate hikes.
A gauge of greenback strength was higher for a second day after Jerome Powell signaled the Federal Reserve may raise rates at the next two meetings after June’s pause. The yen and the yuan were also in focus amid concern from authorities in Japan and China about weakness in their currencies.
The offshore yuan slipped about 0.3%, even as China stepped in to support the currency for a third time this week via 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.
A measure of Asian equities fell in lackluster trading. Japan’s Topix reversed an early gain. Hong Kong’s Hang Seng Index slid more than 1%, led lower by technology companies, with a smaller drop seen in Shanghai.
Asian chipmakers advanced, providing a bright spot after memory maker Micron Technology Inc. gave an upbeat forecast, indicating that an industry glut is easing even as the semiconductor maker continues to face challenges in China. South Korea’s SK Hynix Inc. climbed, as did Micronics Japan Co. and Tokyo Electron Ltd.
Earlier on Wall Street, traders took Powell’s comments in stride, with Treasury yields down on Wednesday and US stocks fluctuating. Treasury yields rose on Thursday.
The tug of war within the S&P 500’s most-influential group dictated trading Wednesday, with a slide in chipmakers offsetting an advance in tech megacaps like Apple Inc. and Microsoft Corp.
After the closing bell, Bank of America Corp. and Wells Fargo & Co. led gains in financial companies as the biggest lenders passed the Federal Reserve’s annual stress test, clearing the way for payouts.
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 maybe rotating into other regions such as Japan and Asia.”
Frederic Neumann, chief Asia economist at HSBC Holdings Plc in Hong Kong, said markets had thought the impact of tighter monetary policy would have ultimately forced central banks to ease, but that this view was so far leading to disappointment.
“It’s very hard to wrap your head around the fact that we’ve increased interest rates so much over the past year and that there wouldn’t be balance sheet impact ultimately on consumers, on the commercial real estate market,” he said on Bloomberg Television.
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
- S&P 500 futures were little changed as of 6:44 a.m. London time. The S&P 500 was little changed
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 0.1%
- Euro Stoxx 50 futures fell 0.1%
- Japan’s Topix fell 0.2%
- Australia’s S&P/ASX 200 was little changed
- Hong Kong’s Hang Seng fell 1.4%
- The Shanghai Composite fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.2% to $1.0887
- The Japanese yen was little changed at 144.54 per dollar
- The offshore yuan fell 0.3% to 7.2626 per dollar
- The Australian dollar rose 0.2% to $0.6612
- The British pound fell 0.1% to $1.2619
Cryptocurrencies
- Bitcoin rose 0.3% to $30,208.03
- Ether rose 0.4% to $1,838.88
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.74%
- Japan’s 10-year yield fell half a basis point to 0.380%
- Australia’s 10-year yield advanced five basis points to 3.92%
Commodities
- West Texas Intermediate crude fell 0.6% to $69.17 a barrel
- Spot gold fell 0.2% to $1,903.85 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Catherine Bosley.
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