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US Futures Rise as Fed Matches Street Betting: End of Markets


(Bloomberg) – U.S. equity index futures rose as investors grew more confident that the Federal Reserve’s top interest rate would be within what the market has priced in.

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Contracts on the S&P 500 and Nasdaq 100 rose at least 0.4% each after the fundamentals avoided a sell-off following the Fed minutes and officials’ comments. Loss-reducing dollar and Treasury bonds. The European equity benchmark halted two-day losses as Nvidia Corp’s bullish outlook. has boosted global tech stock prices. Japan is closed for a holiday.

After months of diverging on the path of monetary tightening, the Fed and markets have become increasingly united in their expectations, reducing the likelihood of hawkish shocks. While the minutes and comments of Fed officials, including James Bullard, reiterate the preference for further rate hikes, they didn’t say anything that wasn’t taken into account by the strong market revaluation. Fed bets in recent weeks.

“One of our big concerns this year is that the market is anticipating an unlikely event,” said Danielle Poli, diversified income fund portfolio manager for Oaktree Capital Management. happens, it’s the Fed’s dovish policy.” said in an interview with Bloomberg television. “The market has woken up a little bit over the past two weeks.”

The dollar traded slightly weaker, after falling to an intraday low. The Australian dollar posted the biggest gain against the greenback thanks to stronger-than-expected business investment data and buying activity by exporters.

Traders are currently pricing the Fed’s top rate at 5.55% in July, compared with the 4.90% they had bet on at the start of the year. However, Fed officials have not become more aggressive this time around: Fed President Bank of St. Louis Bullard reiterated his earlier stance, saying “I’m still at 5.375%. Markets fully priced in a 25 basis point increase in March, but fixed a 24% probability for a 50 basis point gain.

Data on US jobless claims released on Thursday could help shed light on the strength of the labor market, which has remained persistently strong throughout the rate hike cycle. Eurozone inflation data due today will also help investors outline the health of the European economy.

In equities, South Korea’s benchmark rose by the most in a week and the won rose after the central bank left its key rate unchanged with its first pause in rate hikes in a year.

In Europe, technology and industrial goods stocks propelled the Stoxx 600’s small gains. Shares of Rolls-Royce Holdings Plc jumped as much as 20% following the company’s full-year earnings report.

New York premarket deals saw NVidia grow 8%. The chipmaker gave a rising revenue outlook for the current quarter, suggesting that ramping up production of artificial intelligence processors is helping to offset sluggish demand for personal computer chips.

Oil steadied – after its longest drop this year – as traders grasped a mixed demand outlook on US monetary policy tightening and China’s reopening.

This week’s main events:

  • Eurozone CPI, Thursday

  • US GDP, Initial Jobless Claims, Thursday

  • Atlanta Fed President Raphael Bostic Speaks Thursday

  • BOJ gubernatorial candidate Kazuo Ueda appears before the Japanese lower house, Friday

  • US PCE deflation, personal spending, new home sales, University of Michigan consumer sentiment, Friday

  • Russia’s invasion of Ukraine hits one-year mark, Friday

Some key moves in the market:

share

  • Stoxx Europe 600 up 0.1% at 9:30 a.m. London time

  • S&P 500 futures rose 0.4%

  • Nasdaq 100 futures up 0.7%

  • Dow Jones Industrial Average futures rose 0.2%

  • MSCI Asia Pacific Index up 0.1%

  • The MSCI Emerging Markets Index rose 0.5%.

currency

  • Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0595

  • The Japanese yen was little changed at 134.87 per dollar

  • The offshore yuan was little changed at 6.9050 per dollar

  • British Pound drops 0.2% to $1.2021

electronic money

  • Bitcoin up 2.5% to $24,405.29

  • Ether up 2.9% to $1,667.17

bonds

  • Yields on 10-year Treasuries rose two basis points to 3.93%

  • Germany’s 10-year yield was little changed at 2.52%

  • UK 10-year bond yields rise two basis points to 3.62%

Goods

This story was made possible with support from Bloomberg Automation.

–With assistance from Akshay Chinchalkar, Richard Henderson, Alice Gledhill and James Hirai.

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