Asia Stocks, U.S. Futures Dip Before Fed; Oil Down: Markets Wrap

Asia Stocks, U.S. Futures Dip Before Fed; Oil Down: Markets Wrap
Andreea Papuc
·3 min read

(Bloomberg) -- Most Asian stocks slipped Wednesday amid a warning about China’s growth outlook and as traders braced for the Federal Reserve policy decision. Oil fell with the U.S. pressuring OPEC+ to boost supplies.

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Shares were lower in Hong Kong and China in the wake of Premier Li Keqiang’s warning that the world’s second-largest economy faces new downward pressures. The nation is also grappling with its most widespread coronavirus outbreak since the pathogen emerged in Wuhan in 2019.

An iron-ore rebound bolstered commodity-reliant Australia. Japan was shut for a holiday. S&P 500, Nasdaq 100 and European futures edged down following fresh peaks for U.S. shares. Wall Street has been buoyed by the resilience of company profits to rising costs from supply chain and labor disruptions.

A gauge of the dollar held a climb. Cash Treasuries won’t trade in Asia because of the Japan holiday. U.S. Treasury two-year yields overnight joined a global slide in short-term rates that was unleashed by the Australian central bank’s dovish stance. Australian sovereign yields declined.

The gyrations in short-term yields extend a period of heightened bond-market volatility as investors try to anticipate how hawkish central banks may become to quell inflationary pressures. The Fed is expected to announce that it will start tapering its massive bond purchases, but economists are divided on whether a rate liftoff will be next year or in early 2023.

“The big question will be whether they will signal anything about when the rate hikes will start,” Jeanette Garretty, chief economist at Robertson Stephens Wealth Management, said on Bloomberg Television. “I think they are going to try and avoid that.”

Elsewhere, oil retreated, with President Joe Biden blaming OPEC+ for fueling inflation ahead of its meeting Thursday to set output policy. Bitcoin was around $63,000 amid a rally in cryptocurrencies.

Here are some events to watch this week:

  • Fed rate decision, U.S. factory orders and durable goods, Wednesday

  • OPEC+ meeting on output, Thursday

  • Bank of England rate decision, Thursday

  • U.S. trade, initial jobless claims, Thursday

  • U.S. unemployment, nonfarm payrolls, Friday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.1% as of 5:45 a.m. in London. The S&P 500 rose 0.4%

  • Nasdaq 100 futures lost 0.1%. The Nasdaq 100 rose 0.4%

  • Australia’s S&P/ASX 200 Index rose 0.9%

  • South Korea’s Kospi index fell 1.2%

  • Hong Kong’s Hang Seng Index dropped 0.9%

  • China’s Shanghai Composite Index shed 0.5%

  • Euro Stoxx 50 futures fell 0.1%

Currencies

  • The Japanese yen was at 113.86 per dollar, up 0.1%

  • The offshore yuan traded at 6.3994 per dollar

  • The Bloomberg Dollar Spot Index was steady

  • The euro was at $1.1581

Bonds

  • The yield on 10-year Treasuries was little changed at 1.55% Tuesday

  • Australia’s 10-year bond yield fell four basis points to 1.85%

Commodities

  • West Texas Intermediate crude fell 1.5% to $82.69 a barrel

  • Gold was at $1,782.22 an ounce, down 0.3%

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