US equity futures fluctuated before the Federal Reserve releases minutes from the last policy meeting. A selloff in Chinese assets deepened.
(Bloomberg) — US equity futures fluctuated before the Federal Reserve releases minutes from the last policy meeting. A selloff in Chinese assets deepened.
US equity futures swung between gains and losses before trading little changed. Shares of Target Corp. jumped in premarket US trading on a strong profit rebound at the retailer, while Tesla Inc.’s stock fell after the carmaker’s second round of price cuts in China this week.
Government bonds in the US and Europe were broadly stronger, halting a run of losses that was fueled by concern interest rates will be kept at high levels for longer than expected. The pound strengthened as UK inflation topped expectations.
China’s economic woes continued to weigh on markets, despite a slew of stimulus steps by authorities, with the onshore yuan sinking toward its weakest in 16 years against the dollar and the MSCI China Index of stocks set to erase gains seen since a key policy meeting in late July. Minutes from the Fed’s July policy meeting are due to be released later Wednesday.
“There is currently hardly any catalyst, which in turn gives the weak economic forecasts more room to have an impact,” said Frank Sohlleder, an analyst for ActivTrades.
Money-market wagers for the Bank of England’s peak interest rate held steady at 6% after the UK inflation print. The data remained higher than expected last month as the cost of travel and holidays climbed.
The numbers added to hot wage figures and US retail statistics that rattled markets on Tuesday, spurring bets tight central bank policy will be in place for longer. Minneapolis Fed President Neel Kashkari warned that inflation was “still too high.”
US 10-year Treasuries led gains among government bonds on Wednesday on speculation the jump in yields is overdone. The current yield provides a good entry point for investors, according to Steven Major, global head of fixed-income research at HSBC Holdings Plc.
“Going up the US curve to 10 year-plus is now looking more and more interesting,” he said on Bloomberg Television.
In China, the central bank moved again on Wednesday to boost fragile sentiment with a stronger-than-expected reference rate for the yuan and the largest injection of short term cash to the financial system since February. So far the steps have failed to restore optimism and market moves suggest traders are looking for more aggressive supportive measures.
“Market participants are watching the developments on the real estate markets in China and the US with growing concern,” said Andreas Lipkow, a strategist at Comdirect Bank AG.
Elsewhere, benchmark European natural gas futures rose as much as 10% — after gaining 13% on Tuesday — as traders weighed the prospect of disruptions against weak demand and high storage levels in the region. Gold prices edged higher.
Key events this week
- Eurozone industrial production, GDP, Wednesday
- UK CPI, Wednesday
- US FOMC minutes, housing starts, industrial production, Wednesday
- US initial jobless claims, US Conf. Board leading index, Thursday
- Eurozone CPI, Friday
Some of the main moves in markets:
- The Stoxx Europe 600 was little changed as of 11:49 a.m. London time
- S&P 500 futures were little changed
- Nasdaq 100 futures were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index fell 1.3%
- The MSCI Emerging Markets Index fell 0.7%
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0917
- The Japanese yen was little changed at 145.65 per dollar
- The offshore yuan was little changed at 7.3230 per dollar
- The British pound rose 0.3% to $1.2739
- Bitcoin was little changed at $29,168.86
- Ether fell 0.2% to $1,824.42
- The yield on 10-year Treasuries declined three basis points to 4.18%
- Germany’s 10-year yield declined three basis points to 2.64%
- Britain’s 10-year yield advanced two basis points to 4.60%
- Brent crude fell 0.2% to $84.72 a barrel
- Spot gold rose 0.2% to $1,906.24 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Harry Suhartono, Jan-Patrick Barnert and Alice Gledhill.
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