Better-than-expected results from Microsoft and Google helped ease stock market jitters on Wednesday, while a reduction in Russian gas flow weighed on the euro and a Federal Reserve meeting scheduled for later in the year. the day kept bonds and the dollar on edge.
Nasdaq 100 futures rebounded 1.4% and S&P 500 futures rose 0.8% in Asia after Microsoft forecast strong revenue growth and Google’s parent company , Alphabet, saw strong search engine ad sales.
Alphabet shares rose 5% after hours and Microsoft shares rose 4% to ride out some of the gloom voiced Tuesday by retailer Walmart’s earnings warning and some soft U.S. economic data.
MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.6% and the Japanese Nikkei fell 0.3%.
The Federal Reserve is expected to announce a 75 basis point rate hike at 18:00 GMT but investors are wary of a two-way surprise and have preferred safe assets like the dollar.
“The market is trying to convince itself that the peak of inflation has happened,” which would be a basis for more clarity and confidence about future rates and growth, said ING economist Rob Carnell, but that means a Fed that stays the course.
“(The Fed) needs to give the impression that tackling inflation is its number one priority, otherwise the sentiment is that inflation will stay higher for longer,” he said.
Australian data sounded something of a warning on Wednesday as consumer prices rose at their fastest pace in two decades.
In the US, a 75 basis point hike is fully priced on Wednesday, but futures are implying about a 15% chance of a 100 basis point hike. The Treasury market is already anticipating that short-term increases will hurt long-term growth.
Benchmark 10-year Treasury yields were flat at 2.8068% on Wednesday, below two-year yields at 3.0528%. [US/]
On top of concerns about interest rates hurting economies, Europe faces an energy crisis and China is plagued by restrictive COVID-19 policies and renewed fears of a property market crash. .
The euro saw its worst session in a fortnight on Tuesday, slipping 1%, as Russia’s Gazprom said it would further cut westward gas flow and energy prices soared .
It stabilized at $1.0145 in Asia. The Australian dollar was slightly lower at $0.6923. The Japanese yen stabilized at 136.96 per dollar.
The Chinese yuan was under pressure and property stocks fell as investors feared a growing boycott of mortgage repayments on unfinished apartments could spill over to the development and banking sectors.
The CSI onshore property index fell 2% and a Hong Kong index of mainland developers fell more than 5%, led by major developer Country Garden announcing a cut-price share sale.
“China’s housing sector is in the midst of a depression and the recent mortgage boycott is a sign of the severity of the recession,” Societe Generale analysts said.
“The scale of this boycott, as it currently stands, is not unmanageable, but there is a risk of escalation.”
Soaring gas prices in Europe kept oil firm. Brent futures were flat at $104.30 a barrel. U.S. crude futures rose 0.1% to $95.14 a barrel.
Gold was flat at $1,717 an ounce.
(Reporting by Tom Westbrook; Editing by Christopher Cushing)
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