US Futures, Asia Stocks Drop Ahead of PCE Data: Markets Wrap

(Bloomberg) — Contracts for US equities edged lower and stocks in Asia retreated as investors awaited key data for clues on the Federal Reserve’s rate-hike campaign.

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US stock futures slipped as investors looked to Friday’s release of the personal consumption expenditures index — the Fed’s preferred price gauge — which is expected to show acceleration amid robust income and spending growth.

Euro Stoxx 50 futures pointed to gains after the equities were little changed at the close on Thursday.

In Asia, a gauge of equities pushed lower and was on course for a fourth straight weekly decline, the longest losing streak since September. Hong Kong-listed tech stocks led the drop following results from e-commerce giant Alibaba Group Holding Ltd., with analysts staying cautious on the company’s revenue outlook.

Japanese markets were in the spotlight, with data Friday showing accelerating inflation as the government’s nominee to be the next central bank governor faced his first grilling in parliament.

The yen fluctuated against the greenback after Kazuo Ueda told lawmakers he saw inflation peaking. He said the current policy easing was appropriate but added that the central bank could move toward normalization if stable 2% inflation comes into sight.

“Policy normalization is underway at the BOJ, but it will be a very gradual and cautious process, even with a new governor at the helm,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore. As a result, the yen is likely to trade range-bound for the moment, driven more in the near-term by the direction of the broad US dollar and US bond yields, he said.

The dollar was little changed against most major currencies and the benchmark 10-year Treasury looked set to continue its advance into a third day.

Acceleration shown by the PCE Index would add to a string of unfavorable figures that bolster the case for the central bank to hold rates at 5.25% for some time, according to Bloomberg Economics’ Anna Wong. The current benchmark sits in a range between 4.5% and 4.75%.

Investors should still expect volatility to hit the market as the PCE data comes in as every data point will be scrutinized, said Altaf Kassam, EMEA head of investment strategy and research at State Street Global Advisors. “But we think the trend is generally favorable. Disinflation is happening, growth has been reasonably strong and we should come out of this without a hard landing,” he said on Bloomberg Television.

Adani Outreach

The Adani Group will hold a fixed-income investor roadshow in Asia next week. The Indian conglomerate is boosting outreach to investors after its bonds and stock slumped following a critical report from short-seller Hindenburg Research published last month.

Meanwhile, German chemical firm BASF SE announced it decided to terminate a share buyback program ahead of schedule on profound changes in the global economy.

In commodities, oil extended Thursday’s advance, when it snapped its longest losing streak since December amid strength in commodity currencies and signs of appetite for risk taking. Gold ticked higher.

Elsewhere, Bitcoin was on pace for its second monthly advance, breaking with stocks and other riskier assets that have slid amid renewed concern about rising interest rates. The crypto market’s rally recovers only a sliver of the ground lost last year, when prices tumbled and the collapse of the FTX exchange caused a pullback by investors.

Key events this week:

US PCE deflator, personal spending, new home sales, University of Michigan consumer sentiment, Friday
Russia’s invasion of Ukraine hits the one-year mark, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 6:31 a.m. London time. The S&P 500 rose 0.5%
Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 0.9%
Euro Stoxx 50 futures rose 0.4%
Japan’s Topix index rose 0.7%
South Korea’s Kospi index fell 0.6%
Hong Kong’s Hang Seng Index fell 1.2%
China’s Shanghai Composite Index fell 0.5%
Australia’s S&P/ASX 200 Index rose 0.3%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0601
The Japanese yen was little changed at 134.62 per dollar
The offshore yuan fell 0.3% to 6.9382 per dollar
The British pound was little changed at $1.2024

Cryptocurrencies

Bitcoin was little changed at $23,864.07
Ether rose 0.2% to $1,649.05

Bonds

Commodities

West Texas Intermediate crude rose 0.8% to $75.99 a barrel
Spot gold rose 0.2% to $1,825.46 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rob Verdonck, Richard Henderson and Matthew Burgess.