Asia Stocks, U.S. Futures Rise; Oil Hovers at $100: Markets Wrap
- Risk sentiment steadies as traders weigh inflation outlook
- Asian share index climbs for first time in three sessions
Asian stocks and U.S. equity futures rose Wednesday amid a moderation in Treasury yields as investors calibrated inflation risks.
MSCI Inc.’s Asia-Pacific share index climbed for the first time in three sessions, bolstered by Japan, though Chinese equities lagged. S&P 500 and Nasdaq 100 contracts pushed higher while Europe’s edged down.
Markets continued to digest Tuesday’s U.S. inflation data, which came in at 8.5% for the headline number — the highest in four decades — but was better-than-expected at the core level that excludes volatile food and energy prices.
Treasuries trimmed an advance that was sparked by the core reading but yields remained mostly lower than before the figures. The core reading prompted traders to pare back expectations on how aggressively the Federal Reserve will raise interest rates. A dollar gauge was steady.
New Zealand implemented a half-point interest-rate rise — its biggest in 22 years — again highlighting the trend of sharp monetary tightening across a range of economies. But the nation’s bonds rallied as traders reassessed how much tightening might lie ahead.
Oil hovered near $100 a barrel after Russian President Vladimir Putin vowed to continue the war in Ukraine and China partially eased Covid curbs.
Investors are bracing for the latest earnings season as they evaluate the threat from inflation, amid concerns that rising commodity costs and more circumspect consumers will end up squeezing company profits.
“We’re hopeful that this is where it’s going to peak,” Ann Miletti, head of active equity at Allspring Global Investments, said on Bloomberg Television, referring to U.S. inflation. But she added that markets continue to face a wall of worry from rising rates to the impact of China’s Covid lockdowns.
Fed Governor Lael Brainard said the U.S. central bank will move “expeditiously” to raise interest rates to a level that neither stimulates nor slows the economy this year. She said a decision on paring the Fed balance sheet could come as soon as May, with reductions starting in June.
Richmond Fed President Thomas Barkin said interest rates should reach the neutral range as quickly as possible and can move above that should price pressures persist.
The “inflation report on balance validates expectations that the Fed will hike by 50 basis points in May,” Silvia Dall’Angelo, senior economist at Federated Hermes Ltd., wrote in a note.
On the geopolitical front, Putin said peace talks with Ukraine are stalled and vowed to continue his “military operation” there even as he called the conflict “a tragedy.” Ukrainian President Volodymyr Zelenskiy again called for further European Union sanctions on Russia to include oil as well as all banks.
- Bank of Canada rate decision, Wednesday
- EIA crude oil inventory report, Wednesday
- China trade, medium-term lending facilities, Wednesday
- ECB rate decision, Thursday
- Bank of Korea policy decision, Thursday
- U.S. retail sales, initial jobless claims, business inventories, University of Michigan consumer sentiment, Thursday
- Cleveland Fed President Loretta Mester, Philadelphia Fed President Patrick Harker due to speak Thursday
- U.S. stock and bond markets are among those closed for Good Friday