Asian stocks and US equity futures stabilized Wednesday as investors assessed whether an escalating economic slowdown will lead the Federal Reserve to temper the pace of monetary tightening. South Korea led modest early gains among Asian bourses, while S&P 500 contracts fluctuated after the gauge posted a small loss on Tuesday. The latest data showed economic activity weakening from the US to Europe and Asia, underlining the delicate task the Fed faces in hiking interest rates to bring down inflation without sparking a recession.
The dollar and Treasury yields edged up, with the US 10-year rate above 3%. Bonds fell in Australia and New Zealand. Crude oil pared a rally. Investors will pour over Fed Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday for a sense of how hawkish the US central bank will be in the face of mounting economic challenges. A global rebound in equities from a June low has stalled ahead of the much-anticipated event.
“Globally we haven’t seen a deceleration like this that has been so synchronized in many decades,” Frances Stacy, director of strategy at Optimal Capital Advisors LLC, said on Bloomberg Television. “I don’t want to be directional” in picking trades, she added. Goldman Sachs Group Inc. Chief Economist Jan Hatzius said he expects Powell to lay out a case for slower increases. Federal Reserve Bank of Minneapolis President Neel Kashkari said inflation is very high and the central bank must act to bring it under control.
In China, drought and power shortages are compounding challenges from a property crisis and Covid curbs. Investors are also parsing earnings, with JD.com Inc. reporting stronger-than-projected revenue.
What to watch this week
US durable goods, MBA mortgage applications, pending home sales, Wednesday
US GDP, initial jobless claims, Thursday
Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
ECB’s July minutes, Thursday
Fed Chair Powell speaks at Jackson Hole, Friday
US personal income, PCE deflator, University of Michigan consumer sentiment, Friday
Some of the main moves in markets
S&P 500 futures were little changed as of 9:26 a.m. in Tokyo. The S&P 500 fell 0.2%
Nasdaq 100 futures were steady. The Nasdaq 100 was little changed
Japan’s Topix index added 0.1%
Australia’s S&P/ASX 200 index rose 0.4%
South Korea’s Kospi index rose 0.5%
The Bloomberg Dollar Spot Index climbed 0.1%
The euro was at $0.9958
The Japanese yen traded at 136.94 per dollar, down 0.1%
The offshore yuan was at 6.8630 per dollar, down 0.1%
The yield on 10-year Treasuries was at 3.05%
Australia’s 10-year yield increased six basis points to 3.64%
West Texas Intermediate crude was at $93.53 a barrel, down 0.2%
Gold was at $1,746.15 an ounce, down 0.1%