(Bloomberg) — European and US stock futures climbed Thursday against a mixed picture in Asian equities as investors await US inflation data for cues on the Federal Reserve’s next steps.
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Contracts for the Euro Stoxx 50 index gained around 0.7% in Asian trading. Those for US benchmarks advanced close to 0.3%, partly unwinding declines from the prior session, when tech shares led a sell-off.
In Asia, shares in South Korea and China fell, with Hong Kong-listed tech companies among the day’s laggards. Focus was on Alibaba Group Holding Ltd.’s earnings due later in the day, as well as Chinese developer Country Garden Holdings Co.’s debt woes. Japanese and Australian shares posted modest gains.
Long-dated Treasury yields edged slightly higher in Asia after falling in the previous session as investors showed fresh demand for 10-year paper. On Wednesday, a $38-billion auction for 10-year Treasuries was awarded at 3.999%, the third straight new issue to pay a fixed rate of less than 4%.
The two-year yield, which is more sensitive to interest rates, rose six basis points. Australian and New Zealand bond yields traded higher.
Those moves came ahead of US consumer price index data for July due later Thursday. Economists anticipate a slight increase in the headline figure, in part linked to higher oil prices, while core inflation is expected to fall, extending a downward trend that Bloomberg Economics believes will support a rate pause when the Fed next meets in September.
Even if inflation overshoots expectations, the Fed will likely feel its policy is restrictive enough as manufacturing struggles and the jobs market shows signs of softening, according to Fawad Razaqzada, a market analyst at City Index and Forex.com. That means a “small beat” wouldn’t matter too much, he noted.
“A goldilocks outlook in the US is what stock market investors on Wall Street have been enjoying this year – until the recent weakness,” Razaqzada said. “They will be looking for signs that the health and sentiment of the consumer remains positive, enough not increase the risks of a further Fed rate increase, and yet not too depressing to raise recession alarm bells.”
In other key developments, US restrictions on Chinese investments are expected to be narrower than some had feared, as President Joe Biden imposed limits that would regulate investments in some Chinese semiconductor, quantum computing and artificial intelligence firms.
Elsewhere, the Reserve Bank of India kept interest rates on hold as expected, leaving the Indian rupee little changed.
Most currencies in a group of G-10 counterparts strengthened against the greenback, led by the New Zealand and Australian dollars. The offshore yuan gained for a second day while the yen weakened.
Investors were also focused on rising energy prices. Oil traded flat after two days of gains greater than 1% that pushed crude to a nine-month high. Attention was also fixed on surging European natural gas prices after a 28% rise Wednesday that was attributed to the possibility worker strikes in Australia could reduce supply. Citigroup Inc. analysts predict this could cause European gas and Asian LNG contracts for January to double.
The price of rice also surged to the highest level in almost 15 years, as dry weather threatens Thailand’s crop.
Gold edged higher after falling to its lowest level in a month with the precious metal trading at around $1,917 per ounce.
Key events this week:
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US initial jobless claims, CPI, Thursday
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Atlanta Fed President Raphael Bostic pre-recorded remarks for employment webinar, Thursday
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UK industrial production, GDP, Friday
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US University of Michigan consumer sentiment, PPI, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.3% as of 2:26 p.m. Tokyo time. The S&P 500 fell 0.7%
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Nasdaq 100 futures rose 0.4%. The Nasdaq 100 fell 1.1%
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Japan’s Topix rose 0.8%
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Australia’s S&P/ASX 200 rose 0.1%
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Hong Kong’s Hang Seng fell 0.8%
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The Shanghai Composite was little changed
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Euro Stoxx 50 futures rose 0.6%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0984
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The Japanese yen fell 0.2% to 143.95 per dollar
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The offshore yuan was little changed at 7.2237 per dollar
Cryptocurrencies
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Bitcoin was little changed at $29,490.79
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Ether fell 0.1% to $1,849.48
Bonds
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The yield on 10-year Treasuries advanced two basis points to 4.02%
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Japan’s 10-year yield advanced two basis points to 0.585%
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Australia’s 10-year yield advanced four basis points to 4.04%
Commodities
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West Texas Intermediate crude was little changed
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Spot gold rose 0.2% to $1,917.98 an ounce
This story was produced with the assistance of Bloomberg Automation.
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