(Bloomberg) – U.S. stock index futures fell as concerns about the Federal Reserve’s aggressive interest rate hike path hurt strong corporate earnings and stimulus plans. China’s economy.
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September contracts on the S&P 500 index fell 0.5% after the stock benchmark posted modest gains on Tuesday amid gains in retailers’ shares. Nasdaq 100 futures fell 0.7%, signaling the sell-off of tech names will continue. Dollar and Treasury yields rose as investors awaited minutes of the Fed’s final policy meeting for clues on how sensitive policymakers are to economic data. weaker.
US stocks rallied on signs of peak inflation and an earnings season saw four out of five companies meet or beat estimates. However, continued interest rate hikes and the possibility of a recession in the world’s largest economy are weighing on sentiment. Meanwhile, concerns are growing that the Fed’s rate-setters will remain focused on fighting inflation rather than supporting growth.
Carol Kong, strategist at Commonwealth Bank of Australia Ltd., wrote in a note: “We expect the FOMC minutes to take on a hawkish bias. “We wouldn’t be surprised if the minutes showed the FOMC looking at a 100 basis point increase in July.”
Earlier, on Wednesday, stocks rose in Asia amid speculation that China may deploy more stimulus measures to shore up its ailing economy. After a string of weak data due to a slump in the real estate sector and Covid restrictions, Chinese Premier Li Keqiang asked local officials from six key provinces that account for 40% of the economy to increase. measures to promote growth.
Some equity gains capitulated as European trading opened and the focus shifted to the Fed and inflation in the UK jumped to double digits for the first time in four decades.
The Stoxx 600 fell after a strong start amid signs that the continent’s energy crisis is getting worse. The benchmark natural gas futures rose as much as 5.1% on expectations hot weather will boost cooling demand. In the UK, the growth rate of consumer prices increased to 10.1%, causing gilts to plunge.
The dollar edged higher on Wednesday. Treasuries fell, with 10-year yields plus 6 basis points and two-year yields up five basis points. The spread between these two yields remains inverted at around 45 basis points. The yield curve between 10-year and two-year securities fell to its most negative since 2008.
Oil fluctuates between gains and losses, and is at its lowest level in more than six months – reflecting lingering worries about a tough economic outlook amid high inflation and tight monetary policy.
In US pre-market trading, Applied Materials Inc. and PayPal Holdings Inc. fell at least 1.3%. Tech stocks are leading the way for growing pessimism over equity valuations after the Fed raised interest rates. The S&P 500 posted a small gain on Tuesday, helped by earnings reports from retailers Walmart Inc. and Home Depot Inc.
Inflation remains the most closely watched indicator in the second half of the year. Will it fade or will it continue to climb, forcing the Fed to keep raising rates aggressively? Have your say in the anonymous MLIV Pulse survey.
Here are some key events to watch this week:
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Federal Reserve Minutes July, Wed
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UK CPI, US retail sales, Wednesday
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Unemployment in Australia, Thursday
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US existing home sales, initial job applications, Conference Board leading index, Thursday
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Fed’s Esther George, Neel Kashkari to speak at separate events, Thursday
Some key moves in the market:
Inventory
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Futures on the S&P 500 fell 0.5% at 5:53 a.m. New York time
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Nasdaq 100 futures fell 0.7%
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Futures on the Dow Jones Industrial Average fell 0.4%
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Stoxx Europe 600 down 0.2%
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The MSCI World Index was little changed
Currency
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The Bloomberg Dollar Spot Index is up 0.2%
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The euro was little changed at $1.0173
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British Pound was little changed at $1.2103
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Japanese yen fell 0.4% to 134.81 a dollar
Bonds
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Yields on 10-year Treasuries rose six basis points to 2.86%
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German 10-year yield rose 10 basis points to 1.07%
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UK 10-year yield rose 12 basis points to 2.24%
Goods
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West Texas Intermediate crude rose 0.5% to $86.92 per barrel
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Gold futures fell 0.1% to $1,787.40 per ounce
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