U.S. Equity Futures Rise as Inflation Fears Wane: Markets Wrap

(Bloomberg) -- American equity futures rose on Wednesday as more central-bank officials joined the chorus predicting that inflationary pressures are transitory, soothing new concerns raised by the latest U.S. economic data.

Contracts on the S&P 500 and Nasdaq 100 signaled stocks could move higher today following a drop in U.S. benchmarks Tuesday after home-sale and consumer confidence data suggested rising prices are taking a toll. Treasuries trimmed Tuesday’s rally and the dollar was steady, with attention now turning to tomorrow’s jobs data for more clues on the outlook for the economy.

The Stoxx Europe 600 index erased an advance as the banks sub-index declined amid worries about a new tax targeting Swedish lenders. Miners also dropped after China ramped up its efforts to curb commodity prices. Iron ore fell along with most industrial metals.

Signs of quickening inflation are giving investors pause for thought as they consider the outlook for the exceptional stimulus buoying markets. Still, central bankers around the globe are playing down the risk of rising prices. The question is how long the Fed and other central banks can keep stimulative monetary policy in place if economic data continue to show price pressures.

“What we keep hearing from the Fed is that they’re going to take a very different approach to inflation this time around,” Kristina Hooper, Invesco chief global market strategist, said on Bloomberg TV. “The Fed is likely to let the punchbowl stay out a lot longer. The big fear about inflation is that the Fed would act.”

Fed Vice Chair Richard Clarida said price pressures in the U.S. would largely be transitory, though he added officials may be ready to begin discussing how to taper asset purchases in “upcoming meetings”. Bank of France Governor Francois Villeroy de Galhau talked down stimulus adjustments anytime soon, while European Central Bank Executive Board member Fabio Panetta said he sees no signs of sustained inflation that would allow for a reduction in bond purchases.

Elsewhere, oil was steady and gold erased 2021 losses. Bitcoin rallied back above the $40,000 level as cryptocurrencies recover some of the ground lost in this month’s volatile rout.

Here are some events this week:

• CEOs of the largest U.S. banks, including JPMorgan and Goldman Sachs, will testify before lawmakers in the Senate Banking and House Financial Services committees Wednesday.
• U.S. initial jobless claims, GDP, durable goods, pending home sales on Thursday.

These are some of the main moves in markets:

Stocks

• The Stoxx Europe 600 gained 0.1% as of 10:54 a.m. London time
• Futures on the S&P 500 rose 0.3%
• Futures on the Nasdaq 100 rose 0.2%
• The MSCI Asia Pacific Index rose 0.3%
• The MSCI Emerging Markets Index rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.2246
• The Japanese yen fell 0.1% to 108.90 per dollar
• The offshore yuan rose 0.4% to 6.3852 per dollar
• The British pound was little changed at $1.4164

Bonds

• The yield on 10-year Treasuries advanced one basis point to 1.57%
• Germany’s 10-year yield declined three basis points to -0.20%
• Britain’s 10-year yield declined two basis points to 0.76%

Commodities

• Brent crude rose 0.1% to $69 a barrel
• Spot gold rose 0.4% to $1,907 an ounce

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