- Australia’s central bank becomes latest to hike rates further
- Pound rebounds as traders mull agenda of incoming UK PM Truss
An Asian stock gauge struggled for traction Tuesday and US equity futures made modest gains as tightening monetary policy and Europe’s energy crunch continued to weigh on investor sentiment.
Both S&P 500 and Nasdaq 100 contracts were up less than 0.5%, while European futures retreated. Wall Street trading will resume later after the Labor Day holiday. Stock Market Today, Asia’s bourses were mixed, rising in China but down in Hong Kong.
Treasuries dipped, led by shorter maturities, taking the two-year yield to 3.46%. An oil rally sparked by an OPEC+ output cut cooled on demand risks from China’s Covid lockdowns.
A dollar gauge was in sight of a record high. The pound rebounded as traders assessed the agenda of incoming UK Prime Minister Liz Truss, who plans to alleviate energy bills in a policy that may cost £130 billion over 18 months.
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Australia delivered its fourth 50 basis-point interest-rate hike and reiterated it’s not on a predetermined path in the push to curb inflation. Borrowing costs are rising in a slew of economies, tightening financial conditions globally and weighing on stocks and bonds.
“A lot of clients are asking, have we seen the bottom yet and are we going into a global recession?” Grace Tam, BNP Paribas Wealth Management Hong Kong chief investment adviser, said on Bloomberg Television. “We do think the risk of a global recession, especially next year, is actually quite high” and that the energy crisis “is not fully priced” into markets, she said.
The offshore yuan fluctuated in the wake of China’s announcement of a cut in the amount of foreign-exchange deposits banks must set aside as reserves. Officials in China also plan to speed up stimulus, stepping up support for an economy saddled with Covid lockdowns, a property slump and power shortages.
Elsewhere, Bitcoin again fell below the $20,000 level, while gold made gains.
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What to watch this week:
- Apple event due to feature new iPhones, watches, Wednesday
- Bank of England Governor Andrew Bailey at Treasury Committee, Wednesday
- Fed’s Beige Book of regional economic activity, Wednesday
- Cleveland Fed President Loretta Mester due to speak, Wednesday
- European Central Bank rate decision, Thursday
- Fed Chair Jerome Powell speaks at a Cato Institute conference in Washington, Thursday
- Reserve Bank of Australia Governor Philip Lowe speaks at event, Thursday
- China PPI, aggregate financing, money supply, new yuan loans, Friday
- EU energy ministers extraordinary meeting on emergency intervention in electricity markets, Friday
Some of the main moves in markets:
- S&P 500 futures rose 0.4% versus Friday as of 7 a.m. in London. The S&P 500 fell 1.1% on Friday
- Nasdaq 100 futures rose 0.5% versus Friday The Nasdaq 100 fell 1.4% on Friday
- Japan’s Topix index was steady
- Australia’s S&P/ASX 200 index shed 0.4%
- South Korea’s Kospi index added 0.2%
- Hong Kong’s Hang Seng Index fell 0.4%
- China’s Shanghai Composite Index rose 1.1%
- Euro Stoxx 50 futures fell 0.2%
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was at $0.9959, up 0.3%
- The Japanese yen was at 141.06 per dollar, down 0.3%
- The offshore yuan was at 6.9504 per dollar, down 0.1%
- The yield on 10-year US Treasuries rose about five basis points to 3.24%
- Australia’s 10-year bond yield was at 3.66%, up one basis point
- West Texas Intermediate crude was at $88.64 a barrel, up 2% versus Friday
- Gold was at $1,717.15 an ounce, up 0.4%
— With assistance by Richard Henderson