US and European stock futures fell on Wednesday and Asian stocks fell as Treasury yields extended a rally amid a surge in energy costs that is stoking inflationary pressures. The dollar went up.
MSCI Inc.’s Asia-Pacific Index fell for a fourth session, in contrast to an overnight rally on Wall Street fueled by bargain hunting in defeated tech stocks. S&P 500 and Nasdaq 100 contracts declined.
Yields on 10-year and 30-year US Treasuries reached their highest level since June. Faster-than-expected U.S. service sector activity and spiraling cost price pressures for crude oil and natural gas add to the case for a reduction in US bond purchases. the Federal Reserve.
Traders are waiting for this week’s labor data to get more clues about the Fed’s policy outlook. In New Zealand, the central bank raised interest rates for the first time in seven years. Kiwi led declines among Group of 10 currencies due to weak risk sentiment and a lack of clarity on the pace of future rate hikes.
Volatility has picked up in markets as investors prepare for a slower but still robust recovery from the pandemic and a gradual tightening of monetary policy to contain the cost of living. America’s political stalemate on the nation’s debt ceiling and President Joe Biden’s economic agenda are contributing to the uncertainty.
“Over the past five or six months we’ve entered a kind of minicycle in the US where there’s a changing Fed regime and we’re at the extended end of a recovery,” Kieran Calder, Union Bancaire Privee Head of Equity Research for Asia said on Bloomberg Television. “It leaves the market vulnerable to external shocks and increased volatility.”
The 10-year US equilibrium rate, an indicator of where investors see annual inflation over the next decade, is close to the highest since June. Prolonged supply chain disruptions and rising raw material prices are fueling concerns about rising costs.
“Right now, you’re seeing inflation risk really start to creep in and I think you’ll see that it will really affect margins as we move into the fourth quarter into 2022,” Erin Browne, Pimco’s multi-asset portfolio manager. he said on Bloomberg Television. “The energy crisis that is beginning to loom in Europe is a real risk that is being underestimated by the market at the moment.”
Meanwhile, crude oil stabilized near a seven-year high and Bitcoin maintained a rally past the $ 51,000 mark. Elsewhere, concerns about China’s highly leveraged real estate sector continue to weigh on sentiment. The nation’s markets are closed for the holiday and reopen on Friday.
Here are some events to watch this week:
- Reserve Bank of India monetary policy decision on Friday
- US Department of Labor Releases Data on Unemployment and Job Creation on Friday
Some of the main movements in the markets:
- S&P 500 futures were down 0.5% at 7:26 am in London. The S&P 500 rose 1.1%
- Nasdaq 100 futures fell 0.6%. The Nasdaq 100 rose 1.4%
- Japan’s Topix Index down 0.3%
- Australia’s S & P / ASX 200 Index lost 0.6%
- South Korea’s Kospi Index fell 1.5%
- Hong Kong’s Hang Seng Index fell 0.4%
- Euro Stoxx 50 futures fell 0.9%
- The Japanese yen was trading at 111.76 per dollar, down 0.3%.
- The offshore yuan was at 6.4531 to the dollar.
- The Bloomberg Dollar Spot Index added 0.2%
- The euro was at $ 1,1579
- The 10-year Treasury yield advanced about four basis points to 1.56%.
- The yield on Australia’s 10-year bonds rose about nine basis points to 1.61%.
- West Texas Intermediate crude was at $ 79.36 a barrel, up 0.5%
- Gold was at $ 1,752.44 an ounce, down 0.4%.
© 2021 Bloomberg