European equity futures inched lower while stock benchmarks across Asia climbed as investors balanced China’s reopening with cautious commentary from the Federal Reserve’s latest meeting.
(Bloomberg) — European equity futures inched lower while stock benchmarks across Asia climbed as investors balanced China’s reopening with cautious commentary from the Federal Reserve’s latest meeting.
Contracts for the Euro Stoxx 50 index fell to indicate the first decline in three sessions for the region-wide benchmark on Thursday. US futures swung between gains and losses. Mainland and Hong Kong equity gauges rose in a rally helped along by news China will gradually reopen its border with Hong Kong. The Hang Seng Index climbed to the highest level since July led by Meituan and Alibaba Group Holding Ltd., signaling fresh appetite for mainland tech stocks. Shares in South Korea, Japan and Australia rose.
“Optimism on reopening and supportive policy can continue to drive the market for now, along with investors’ fear of missing out, but at some point it will have to take a pause for re-evaluation,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “It’s always hard to call an end to momentum-driven rallies.”
The minutes of the Fed’s December meeting showed many officials highlighted the need to curb inflation without slowing the economy too much, heartening some investors. Meanwhile, traders are returning to Chinese equities amid a growing conviction the relaxation of virus curbs will fuel a revival in consumption and spending.
The yen strengthened against all its Group-of-10 peers, rebounding after a 1.2% decline versus the dollar on Wednesday. Treasuries gave up some of the prior day’s gains, while sovereign debt in Australia and New Zealand rallied.
Crude oil rose after falling 9.5% in the past two days, including the biggest daily decline since September on Wednesday. China’s complicated reopening is one factor that drove the drop. The price of gold whipsawed after touching the highest level since June on Wednesday.
US data released Wednesday showed improving supply-chain conditions, declining input prices and slower demand — all developments the Fed would welcome. Still, Amazon.com Inc. said it is laying off more than 18,000 workers — a significantly bigger number than previously planned — in the latest sign that a technology slump is deepening. The nonfarm payrolls report on Friday will provide a clearer picture of the labor market.
“The Fed wanted to send a message to the market that they would not be easing or cutting rates anytime in 2023,” said Joe Gilbert, portfolio manager for Integrity Asset Management. “However, we must remember that the Fed also did not forecast raising rates by 400 basis points 12 months ago, so their forecasting ability of their own actions is sometimes quizzical.”
Read More: Fed Affirms Inflation Resolve, Pushes Back Against Rate-Cut Bets
Key events this week:
- Eurozone PPI, Thursday
- US ADP employment change, initial jobless claims, Thursday
- China trade, Caixin PMI, Thursday
- Eurozone retail sales, CPI, consumer confidence, Friday
- Germany factory orders, Friday
- US nonfarm payrolls, factory orders, durable goods, Friday
The main markets moves are:
Stocks
- S&P 500 futures fell 0.1% as of 3:39 p.m. Tokyo time. The S&P 500 rose 0.8%
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 0.5%
- Hong Kong’s Hang Seng rose 1.3%
- The Shanghai Composite rose 1.1%
- The S&P/ASX 200 Index rose 0.1%
- Euro Stoxx 50 futures fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0614
- The Japanese yen was little changed at 132.51 per dollar
- The offshore yuan rose 0.3% to 6.8790 per dollar
Cryptocurrencies
- Bitcoin was little changed at $16,818.41
- Ether fell 0.1% to $1,250.71
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.71%
- Japan’s 10-year yield declined three basis points to 0.43%
- Australia’s 10-year yield declined seven basis points to 3.84%
Commodities
- West Texas Intermediate crude rose 1.4% to $73.87 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Charlotte Yang.
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