Stocks rose Wednesday and a selloff in sovereign bonds paused, bringing some relief for markets from the concerns about tightening monetary policy that have whipsawed assets this year.
An Asia-Pacific share gauge jumped 1% to a two-week high, helped by Japan and a rally in a Hong Kong technology index. China’s stocks were steady in the wake of intervention by state-backed funds on Tuesday.
U.S. equity futures advanced after the S&P 500 closed near session highs. Dip-buying lifted the Nasdaq 100 and a U.S. small-cap gauge outperformed.
The 10-year U.S. Treasury yield retreated from levels last seen in 2019. But bond markets remain wary as the Federal Reserve gears up to raise interest rates to quell inflation. A dollar gauge fluctuated.
Meanwhile, the Bank of Japan chose not to deviate from its planned bond purchases, holding fire even as yields continued to rise.
Investors are weighing up still-robust corporate earnings against worries about a rapid withdrawal of pandemic-era stimulus. Data this week is expected to show U.S. inflation continues to overheat, potentially stoking bets on a more aggressive Fed liftoff in March.
“We’re still in an environment where a lot is going quite well for the economy,” Lauren Goodwin, a multi-asset portfolio strategist at New York Life Investments, said on Bloomberg Television. “It’s still an all-cyclicals story from our perspective.”
She said the firm is looking at asset classes like small-caps and value stocks while stressing the importance of security selection.
Prop From Earnings
About 76% of S&P 500 firms that have reported results beat earnings estimates, with profits coming in more than 6% above projected levels.
“Even though the growth rate is slowing, we are still seeing positive revisions going forward,” Erin Gibbs, Main Street Asset Management chief investment officer, said on Bloomberg Television.
That and forward guidance suggest companies “clearly think that profit growth is going to significantly outpace inflation for a year so that is another positive sign,” Gibbs said.
Oil trimmed a sharp drop as traders weighed tensions in Eastern Europe and the resumption of Iran nuclear talks. Bitcoin was trading around $44,000.
Here are some events to watch this week:
- Earnings: AstraZeneca, GlaxoSmithKline, Toyota Motor, Twitter, Uber, Walt Disney
- Federal Reserve Bank of Cleveland President Loretta Mester speaks Wednesday
- U.K. Bank of England Governor Andrew Bailey speaks Thursday
- U.S. consumer price index, initial jobless claims Thursday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 11:04 a.m. in Tokyo. The S&P 500 rose 0.8%
- Nasdaq 100 futures climbed 0.3%. The Nasdaq 100 rose 1.2%
- Japan’s Topix index rose 0.9%
- Australia’s S&P/ASX 200 Index increased 0.3%
- South Korea’s Kospi index rose 0.9%
- Hong Kong’s Hang Seng Index climbed 2%
- China’s Shanghai Composite Index was steady
Currencies
- The Japanese yen was at 115.40 per dollar, up 0.1%
- The offshore yuan was at 6.3662 per dollar
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was at $1.1426, up 0.1%
Bonds
- The yield on 10-year Treasuries fell three basis point to 1.94%
- Australia’s 10-year bond yield fell two basis points to 2.10%
Commodities
- West Texas Intermediate crude rose 0.1% to $89.49 a barrel
- Gold was at $1,827.58 an ounce
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