U.S. Futures Rise, Stocks Steady as Dollar Slips: Markets Wrap
- S&P 500, Nasdaq 100 and European equity contracts push higher
- Australia hikes rates amid a global wave of policy tightening
U.S. and European equity futures rose Tuesday, while Asian stocks were steady, as investors evaluated the implications of a global wave of monetary tightening to tackle elevated inflation.
The Asian session was whipsawed by wild swings in Alibaba Group Holding Ltd. in Hong Kong on a brief bout of concern about the status of co-founder Jack Ma. The worries faded and the city’s stock market turned higher as officials stepped up plans to roll back Covid curbs. Markets in Japan and China are shut.
The Alibaba episode did serve to underscore ongoing anxiety about Beijing’s regulatory crackdown on the technology sector, even after the nation’s top leaders last week vowed support for so-called platform firms.
Australia’s central bank increased interest rates, implementing a 25 basis points move that was larger than many analysts had expected. It said tighter policy will be needed to meet its inflation goal. The local currency jumped and bonds slid.
Treasuries fell Monday, taking the 10-year yield to 3% and sending real yields back above zero. A dollar gauge slipped while remaining in sight of a two-year high. Investors are bracing for the Federal Reserve’s biggest rate hike since 2000. There’s no cash Treasuries trading in Asia due to the Japan holiday.
The key question for markets remains whether the global economy can weather the shift toward tighter financial conditions, including reduced central-bank balance sheets. Bouts of optimism have tended to fizzle rapidly this year.
“Our view remains that the right strategy right now is to position for inflation -- a clear and present fact -- rather than recession, which is still only a possibility,” Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, wrote in a note.
In China, authorities continue to fight a Covid outbreak with lockdowns that are hampering both the economy and global supply chains.
Elsewhere, oil held at about $105 a barrel. Traders weighed higher demand for refined products against demand risks from China’s slowdown.
Dip-buying in the technology sector led U.S. equities higher Monday after a bruising April for global markets.