Asia Stocks to Dip as Fed Meets; Oil Extends Rally: Markets Wrap

(Bloomberg) -- Asian stocks looked set to slip Wednesday after their U.S. peers retreated from all-time highs amid mixed economic data and a two-day Federal Reserve meeting. Crude oil traded at the highest level since 2018.

Futures pointed lower in Japan, Australia and Hong Kong. U.S. futures were little changed in early Asia trading. Earlier, the technology and real estate sectors weighed on the S&P 500, which snapped a three-session winning streak. The 10-year Treasury yield lingered near 1.5% for most of the day after Commerce Department figures showed retail sales declined in May. Producer prices further stoked price pressures, rising more than expected in May. The dollar held gains versus major peers.

Investors have been marking time ahead of the Fed’s policy decision as they await for clues about when the central bank will slow the pace of emergency asset purchases. The statement is set to include updated forecasts, and expectations are that officials would broadcast any taper plans well in advance.

Economists expect the so-called dot plot to point to an interest-rate increase in 2023, while the bank is unlikely to signal a scaling back of bond purchases until later this year.

“The outlook looks pretty positive but a lot of investors are asking for there to be better clarity on when we are going to have some start to the taper,” Julie Biel, portfolio manager and senior research analyst at Kayne Anderson Rudnick, said on Bloomberg Television. “There’s a lot of nerves that we are going to wait too long, the economy is going to overheat and then we’re going to have to taper all at once, so there are a lot of dueling pressures.”

Elsewhere, Bitcoin fluctuated around $40,000. West Texas Intermediate crude traded above $72 a barrel as investors weighed the outlook for rising demand against extended anti-virus curbs in some economies.

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Here are some key events to watch this week:

• The Federal Open Market Committee rate decision comes on Wednesday, with a news conference from Jerome Powell after
• U.S. President Joe Biden and Russia’s Vladimir Putin meet Wednesday in Geneva
• U.S. Treasury Secretary Janet Yellen testifies before a House panel Thursday on the federal budget
• Rate decisions come from Switzerland and Norway on Thursday
• The Bank of Japan’s monetary policy decision is on Friday

These are some of the main moves in markets:

Stocks

• S&P 500 futures were flat as of 8 a.m. in Tokyo. The S&P 500 fell 0.2%
• Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 0.7%
• Nikkei 225 futures fell 0.3%
• Australia’s S&P/ASX 200 Index futures fell 0.2%
• Hang Seng Index futures fell 0.2%

Currencies

• The yen was little changed at 110.05 per dollar
• The offshore yuan was at 6.4055 per dollar
• The Bloomberg Dollar Spot Index was flat
• The euro was little changed at $1.2127

Bonds

• The yield on 10-year Treasuries was little changed at 1.49%
• Australia’s 10-year bond yield rose three basis points to 1.53%

Commodities

• West Texas Intermediate crude rose 0.4% to $72.42 a barrel
• Gold was at $1,859.75 an ounce

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