(Bloomberg) — Contracts for US stocks fell sharply and stocks in Asia retreated as investors waited for key data for clues to the Federal Reserve’s rate hike campaign.
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US stock futures fell as investors awaited Friday’s release of the personal consumer spending index – the Fed’s preferred price gauge – expected to show an acceleration amid robust income and spending growth.
Euro Stoxx 50 futures pointed to gains after shares moved little on Thursday.
In Asia, a measure of stocks slumped and headed for a fourth straight weekly decline, the longest streak of losses since September. Hong Kong-listed technology stocks led the decline following results from e-commerce giant Alibaba Group Holding Ltd., with analysts remaining cautious about the company’s revenue outlook.
Japanese markets were in the spotlight, with data from Friday showing accelerating inflation as the government’s nominee to become the next central bank governor came under attack in parliament for the first time.
The yen fluctuated against the greenback after Kazuo Ueda told lawmakers he saw inflation spike. He said the current policy easing was appropriate, but added that the central bank could move towards normalization if stable inflation of 2% comes into view.
“The BOJ is normalizing policy, but it will be a very gradual and cautious process, even with a new governor at the helm,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore. As a result, the yen is currently likely to trade within a range, driven more in the near term by the direction of the broad US dollar and US bond yields, he said.
The dollar was little moved against most of the major currencies and the benchmark 10-year Treasury seemed poised to continue its march into a third day.
An acceleration shown by the PCE index would add to a string of unfavorable data that Anna Wong of Bloomberg Economics says reinforces the central bank’s case for keeping rates at 5.25% for some time. The current benchmark is in a range between 4.5% and 4.75%.
Investors should still be prepared for market volatility when the PCE data comes in, as each data point will be scrutinized, said Altaf Kassam, head of investment strategy and research EMEA at State Street Global Advisors. “But we think the trend is generally favorable. There is disinflation, growth is quite strong and we need to get out of this without a hard landing,” he said on Bloomberg Television.
The Adani Group will hold a roadshow for fixed income investors in Asia next week. The Indian conglomerate is expanding its reach to investors after its bonds and stocks collapsed following a critical report from short-seller Hindenburg Research released last month.
Meanwhile, German chemical company BASF SE announced it had decided to end a share buyback program ahead of schedule due to sweeping changes in the global economy.
In commodities, oil extended Thursday’s gains as it broke its longest losing streak since December amid strong commodity currencies and signs of a willingness to take risks. Gold ticked higher.
Elsewhere, Bitcoin was on track for its second monthly run, breaking with stocks and other riskier assets that have slipped amid renewed concerns about rising interest rates. The crypto market rally is just recovering some of the lost ground from last year, when prices plummeted and the collapse of the FTX stock exchange caused investors to pull back.
Main events this week:
US PCE deflator, personal spending, new home sales, University of Michigan consumer confidence, Friday
Russia’s invasion of Ukraine marks its one-year milestone on Friday
Some of the major movements in markets:
S&P 500 futures were little changed as of 6:31am London time. The S&P 500 rose 0.5%
Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 0.9%
Euro Stoxx 50 futures up 0.4%
Japanese Topix index rose 0.7%
South Korea’s Kospi index fell 0.6%
Hong Kong’s Hang Seng index fell 1.2%
China’s Shanghai Composite Index fell 0.5%
The Australian S&P/ASX 200 index rose 0.3%
The Bloomberg Dollar Spot Index had changed little
The euro was little changed at $1.0601
The Japanese yen changed little at 134.62 per dollar
The offshore yuan fell 0.3% to 6.9382 per dollar
The British pound was little changed at $1.2024
Bitcoin was little changed at $23,864.07
Ether rose 0.2% to $1,649.05
West Texas Intermediate crude rose 0.8% to $75.99 a barrel
Spot gold rose 0.2% to $1,825.46 an ounce
This story was created with the help of Bloomberg Automation.
–With assistance from Rob Verdonck, Richard Henderson and Matthew Burgess.
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