Global stocks ceded earlier gains, as data showing economic resilience and persistent inflationary pressures cemented expectations of further interest rate hikes in the US and Europe.
(Bloomberg) — Global stocks ceded earlier gains, as data showing economic resilience and persistent inflationary pressures cemented expectations of further interest rate hikes in the US and Europe.
While Japanese stocks surged as much as 1.5%, lifted by the central bank’s decision to double down on its commitment to stimulus, Europe’s Stoxx 600 equity benchmark opened more or less flat. Futures on the S&P 500 and the Nasdaq retreated, following a rally on Thursday, with sentiment was dampened by a warning from Amazon.com Inc. after the market close about cooling growth in its key cloud computing business.
On currency markets, the yen tumbled about 1.3% and the Bank of Japan’s signal it would stick with loose monetary policy for the time being.
Markets remain on edge, as data showing a surprise increase in US inflation pressures reinforced expectations of a Federal Reserve interest rate hike in May, and possibly in June. In Europe, a growth rebound in France and a forecast-beating expansion in Spain have fanned hopes Europe can evade a recession, but an uptick in consumer-price gains cements the case for further European Central Bank rate increases.
Analysts at Berenberg said equities’ strong year-to-date gains had been driven by resilient earnings and receding pessimism on economic growth, but “risks are skewed to the downside over the coming months, with headwinds from tighter policy, margin headwinds and US recession.”
On Thursday, US equities enjoyed the biggest daily gain since January, thanks to solid earnings from technology firms, including Meta Platforms Inc. and Intel Corp.. which came on the heels of robust results from Microsoft Corp. and Alphabet Inc. earlier in the week. However, the Amazon warning soured the mood while some other firms such as Snap Inc. and Pinterest also disappointed.
“We certainly see big tech do well in earnings but we’re also seeing quite a lot of other companies that are slowing down,” Laila Pence, president of Pence Wealth Management, said on Bloomberg Television.
Meanwhile, the Fed and European Central Bank will almost certainly proceed with rate hikes next week, the Bank of Japan left its short-term policy rate at minus 0.1% in the first meeting under new governor Kazuo Ueda, maintained its 0.5% ceiling for 10-year bond yields and lauched a policy review that may take one-and-a-half years.
That drove the yen as much as 1.2% lower versus the dollar. The greenback gained against a basket of Group-of-10 currencies, while Treasuries stabilized, after sliding on Thursday.
Elsewhere, oil prices headed for a sixth straight monthly decline, weighed down by slowdown concerns in the US and Asia.
Here are some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.3% as of 3:34 a.m. New York time
- Nasdaq 100 futures fell 0.3%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The Stoxx Europe 600 was little changed
- The MSCI World index was little changed
- S&P 500 futures fell 0.3%
- Nasdaq 100 futures fell 0.3%
- The MSCI Asia Pacific Index rose 0.3%
- The MSCI Emerging Markets Index rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.2% to $1.1006
- The British pound fell 0.1% to $1.2483
- The Japanese yen fell 1.3% to 135.74 per dollar
- The offshore yuan was little changed at 6.9341 per dollar
Cryptocurrencies
- Bitcoin fell 0.6% to $29,467
- Ether fell 0.1% to $1,917.51
Bonds
- The yield on 10-year Treasuries declined three basis points to 3.49%
- Germany’s 10-year yield declined three basis points to 2.43%
- Britain’s 10-year yield declined two basis points to 3.77%
Commodities
- West Texas Intermediate crude rose 0.2% to $74.93 a barrel
- Gold futures fell 0.3% to $1,993 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck and Richard Henderson.
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