(Bloomberg) – Equity futures were mixed on Wednesday as investors awaited clues from leading central bankers on the direction of their monetary policy.
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European equity contracts rose 0.4% after the Stoxx Europe 600 index closed flat on Tuesday, ending a six-day losing streak. US stock futures fell slightly.
Policymakers are meeting at the European Central Bank Forum in Portugal, where the ECB’s Christine Lagarde, the Federal Reserve’s Jerome Powell, the Bank of Japan’s Kazuo Ueda and the Bank of England’s Andrew Bailey will speak in a policy panel discussion. Central banks are aggressively tackling inflation, which is proving to be more stubborn than expected.
In Asia, too, the overall picture was mixed for equities, with the Asian equity index up 0.5%. Japan and Australia rallied, while Chinese stocks faltered after reports the Biden administration is considering further export restrictions on powerful chips used to train artificial intelligence.
Nvidia Corp. was lower in US after-hours trade after earlier tech megacaps helped US stocks rebound on strong economic data. But the data demonstrating economic resilience also underscores the likelihood that the Fed will need to tighten further. That pushed government bond yields higher on Tuesday. They stabilized in Asian trading on Wednesday.
In the currency markets, the Australian dollar fell as much as 1% before partially reversing the decline. Meanwhile, the yen rose from a closely watched 145 level against the dollar after Japan’s top monetary official said authorities would react if there were excessive exchange rate movements. The offshore yuan fell slightly after the People’s Bank of China set its daily reference rate for the managed currency in line with estimates.
The story goes on
The longer-term market impact of further US restrictions on technology sales to China was unclear.
“The report that the US is considering further restrictions on chip exports to China may have dampened sentiment,” said Vey-Sern Ling, managing director at Union Bancaire Privee in Singapore.
Robert Lea, an analyst at Bloomberg Intelligence, said further restrictions could delay AI developments by Chinese companies without significantly changing things in the long run. “Chinese AI companies may also be able to obtain special AI chips from third countries,” Lea said. “So I think it’s going to be difficult for the US to enforce the regulations.”
The results of the Fed’s annual banking sector stress test will be released later on Wednesday. Analysts are largely expecting banks to pass the tests, even as regulators consider tighter requirements following a couple of financial industry meltdowns.
Elsewhere, oil prices rose as investors weighed the outlook for monetary policy and a mixed industry report on US crude inventories. Gold hasn’t changed much.
Important events this week:
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US Wholesale Inventories, Goods Trade Balance, Wednesday
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The Fed will present the results of its annual stress test for the banking industry on Wednesday
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Policy panel with ECB Chair Christine Lagarde, Fed Chair Jerome Powell, BOJ Chair Kazuo Ueda and BOE Chair Andrew Bailey, Wednesday
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Eurozone Economic Confidence, Consumer Confidence, Thursday
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US GDP, Initial Jobless Claims, Thursday
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Atlanta Fed President Rafael Bostic speaks Thursday
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China Manufacturing PMI, Non-manufacturing PMI, Balance of Payments, Friday
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US Personal Income and Expenditure, Consumer Sentiment at University of Michigan, Friday
Some of the key movements in the markets:
Shares
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S&P 500 futures were down 0.1% as of 6:54 a.m. London time. The S&P 500 rose 1.15%
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Nasdaq 100 futures fell 0.3%. Nasdaq 100 up 1.75%
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Japan’s Topix rose 1.9%
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Australia’s S&P/ASX 200 rose 1.2%
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Hong Kong’s Hang Seng hasn’t changed much
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The Shanghai Composite has hardly changed
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Euro Stoxx 50 futures up 0.4%
currencies
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The Bloomberg Dollar Spot Index rose 0.1%
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The euro was little changed at $1.0952
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The Japanese yen was little changed at 143.99 per dollar
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The offshore yuan fell 0.1% to 7.2330 per dollar
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The Australian dollar fell 0.7% to $0.6640
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The British pound fell 0.2% to $1.2728
cryptocurrencies
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Bitcoin fell 0.6% to $30,462.14
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Ether fell 1.3% to $1,868.72
Bind
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The 10-year government bond yield was little changed at 3.76%
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Japan’s 10-year yield rose two basis points to 0.390%
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Australia’s 10-year yield fell five basis points to 3.88%
raw materials
This story was created with the support of Bloomberg Automation.
– With support from Charlotte Yang, Ameya Karve and Allegra Catelli.
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