(Bloomberg) — European stocks steadied and Wall Street equity futures pared their losses as investors weighed how the latest inflation data from the US and the UK will affect the outlook for interest rates and as they digested results from major companies.
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Europe’s Stoxx 600 was little changed, supported by gains in consumer stocks. Barclays Plc dropped the most in more than 11 months after the bank’s earnings missed estimates. Contracts for the S&P 500 retreated, but were off their lows for the session, after the index ended Tuesday little changed. Nasdaq 100 futures also slid after the gauge, which is more sensitive to higher interest rates, rose 0.7% on Tuesday.
An Asian equity benchmark was headed for the lowest close in more than a month. Turkish stocks soared on their return from a week-long suspension following devastating earthquakes.
The two-year Treasury yield remained near the highest level since November after adding 10 basis points Tuesday. The 10-year Treasury benchmark was broadly flat after falling four basis points in the prior session. The dollar edged higher against all of its Group-of-10 peers.
Investors are evaluating US CPI data that showed prices rose more than forecast, and subsequent comments from Federal Reserve officials. UK inflation also remains stubbornly high, in double digits and five times above the Bank of England’s target, according to data out Wednesday. Still, the pound weakened as the figures showed that CPI fell more than expected in January. Traders trimmed their bets on further rate hikes and gilts jumped.
“I think the risk for global markets is definitely the way the market has decided and is overjoyed about the inflationary story ending — It is not believing that inflation is here to stay,” Aarthi Chandrasekaran, a portfolio manager at Shuaa Capital, said on Bloomberg Television. “I think eventually the market will lose a bit of its call on the equity side.”
Federal Reserve Bank of Philadelphia President Patrick Harker said the Fed was nearing the point where rates were restrictive enough. “In my view, we are not done yet,” he said. “But we are likely close.”
Harker’s Richmond Fed counterpart Thomas Barkin told Bloomberg TV that the central bank might “have to do more”to fight inflation and Dallas Fed President Lorie Logan said rate increases could last “for a longer period than previously anticipated.”
“Inflation is still falling, but it’s not falling as quickly as we hoped,” Benjamin Kirby, co-head of investments for Thornburg Investment Management, said in an interview with Bloomberg Television. “The overall narrative is pretty much intact,” he added. “The Fed is nearing its terminal rate.”
Oil fell for a second day after after an industry estimate pointed to a large build in US inventories and investors assessed the outlook for US monetary policy. The International Energy Agency boosted forecasts for global oil demand as China reopens its economy following years of anti-Covid lockdowns. Gold slipped.
Turkey’s Borsa Istanbul 100 Index rose more than 9% as the benchmark gauge partly recouped losses of tens of billions of dollars that followed the Feb. 6 twin earthquakes in the country’s southeast. Investors took heart from the government’s measures to channel billions of liras from state institutions and the stock exchange’s steps to contain volatility.
Elsewhere, the People’s Bank of China added more cash into the financial system to meet a rebound in loan demand after the nation eased Covid restrictions.
Key events:
US retail sales Wednesday
US jobless claims, Australia unemployment, Cleveland Fed President Loretta Mester speaks at Global Interdependence Center event Thursday
France CPI, Russia GDP Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 9:04 a.m. London time
S&P 500 futures fell 0.3%
Nasdaq 100 futures fell 0.4%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index fell 1.3%
The MSCI Emerging Markets Index fell 1.1%
Currencies
The Bloomberg Dollar Spot Index rose 0.4%
The euro fell 0.2% to $1.0719
The Japanese yen fell 0.2% to 133.42 per dollar
The offshore yuan fell 0.2% to 6.8531 per dollar
The British pound fell 0.6% to $1.2100
Cryptocurrencies
Bitcoin fell 0.6% to $22,108.25
Ether fell 0.6% to $1,547.56
Bonds
The yield on 10-year Treasuries was little changed at 3.75%
Germany’s 10-year yield declined two basis points to 2.42%
Britain’s 10-year yield declined nine basis points to 3.43%
Commodities
Brent crude fell 1.5% to $84.27 a barrel
Spot gold fell 1.1% to $1,834.48 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar, Allegra Catelli, Richard Henderson and Tony Jordan.
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Source: https://finance.yahoo.com/news/asia-stocks-set-choppy-open-224521125.html