Stocks Volatility on Fed Minutes, China Cross Wind: Markets Wrapped
(Bloomberg) – Asian stocks and US futures fluctuated in choppy trading on Thursday as traders weighed down pessimistic statements about the Chinese economy by Premier Li Keqiang with the Federal Reserve’s meeting minutes that were no more hawkish.
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MSCI Inc. Fluctuation Scale For Asia-Pacific stocks, with Japan rising, while Hong Kong fell. S&P 500 and Nasdaq 100 futures skewed between gains and losses. Overnight, the S&P 500 rebounded from a low to end up, while the high-tech Nasdaq 100 index outperformed.
Chinese stocks had mixed trading as investors remained vigilant about measures to combat the economic malaise from strict Covid restrictions. The Chinese premier said the Chinese economy is in some respects doing worse than it was in 2020 when the epidemic first appeared, and he urged efforts to bring down the high unemployment rate.
“We’ve seen some false dawns where we’ve heard what sounded like very encouraging words, but so far we haven’t seen follow-up action coming through the policy space — nothing in the category of shock and awe,” said Ben Powell, chief strategist at BlackRock Investments Asia Pacific. On Bloomberg TV: “To give markets the confidence to move forward.”
Yields on 10-year Treasuries rose, as did two-year interest rates, which are more sensitive to impending policy moves. Fed policymakers have indicated that their aggressive set of moves may leave them the flexibility to change pace later if necessary. The dollar fell.
Investors took some relief from the Fed minutes which did not show a more aggressive path being set to deal with higher prices. However, volatility has risen as the risks of a recession in the US grow, the impact of lockdowns in China and the Ukraine war.
“If inflation is tamed enough over the summer, there may not be a sustained rate hike,” Carol Pepper, CEO of Pepper International, said on Bloomberg TV, adding that investors should look to buy tech stocks after the sell-off. “Stagflation, I don’t think that’s going to happen anymore. I think we will be in a situation where inflation starts to decrease and then we start to enter into a more normalized market.”
Most US policymakers saw increases in the half-point rate as appropriate in the next two meetings, consistent with comments from President Jerome Powell. While they noted the potential for interest rates to rise enough to constrain the economy, there were hints of a possible pause – an “accelerated” tightening would leave the Fed “in a good position later this year to assess the effects of policy constancy and the extent to which economic developments require adjustments in Politics “.
Markets continued to show traders aiming for a 100 basis point hike in interest rates over the next two meetings.
The Bank of Korea raised its key interest rate on Thursday as new governor Ri Chang-yong demonstrated his determination to tackle inflation in his first policy meeting since taking office. The Reserve Bank of New Zealand also demonstrated its commitment this week to combating price hikes.
Read: Continued buyers push the S&P 500 to its fourth straight bounce late in the day
Here are some of the main events to watch this week:
US GDP, Initial Jobless Claims Thursday
US core PCE price index; personal income and spending; wholesale inventory; Consumer Confidence at the University of Michigan Friday
Some of the main movements in the markets:
S&P 500 futures were down 0.2% as of 12:15 p.m. in Tokyo. The S&P 500 rose 1%.
Nasdaq 100 futures fell 0.5%. The Nasdaq 100 is up 1.5%.
Topix index rose 0.3%
Australia’s S&P/ASX 200 Index is down 0.5%
The Kospi rose 0.2%.
The Hang Seng Index is down 1.1%.
The Shanghai Composite Index is down 0.2%.
Euro Stoxx 50 futures fell 0.2%
Bloomberg spot dollar index down 0.1%.
The Japanese yen was at 127.39 to the dollar
The offshore yuan was 6.7244 per dollar, down. 0.2%
The euro was at 1.0700 dollars
West Texas Intermediate crude rose 0.6 percent to $110.99 a barrel
Gold was at $1,851.15 an ounce
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