(Bloomberg) — Stocks edged lower and the dollar rose on renewed concern about higher-for-longer US interest rates, with all eyes on the Federal Reserve’s policy decision due later Wednesday.
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The risk-off mood prevailed in a holiday-thinned session in Europe and Asia. Contracts on the S&P 500 pointed to further losses on Wall Street after US data on Tuesday reinforced bets officials will keep rates steady at a two-decade high. Europe’s Stoxx 600 declined 0.1% at the open. A dollar gauge climbed, while 10-year Treasury yields turned flat after a seven basis point jump in the previous session.
The last time Fed Chair Jerome Powell spoke, he pointed to the lack of progress in bringing inflation down. The most recent signals on prices and the economy — along with expectations for a robust employment report on Friday — are unlikely to prompt a change of tune.
“If the Fed asserts a high probability of no cuts this year, or even the open possibility of another hike, that could deepen the selloff in stocks,” said Kyle Rodda, a senior market analyst at Capital.com.
Traders will also be weighing Amazon.com Inc.’s strong cloud unit sales, released late Tuesday, and a lukewarm revenue forecast from Advanced Micro Devices Inc., the second-biggest maker of computer processors.
US equities saw their worst month since September as the hot labor cost statistics and a plunge in consumer confidence dragged. Asian markets were also in the red on Wednesday with Japan’s Nikkei 225 index retreating further after its worst month since December 2022.
Elsewhere, global investors are unwinding bets on local-currency bonds in emerging markets as some central banks come under pressure to raise interest rates — rather than cut them as widely anticipated just weeks ago.
Oil continued to slip as the potential for a cease-fire in the Middle East eased tensions.
Key events this week:
Holiday across much of Asia and Europe, Wednesday
Treasury’s quarterly refunding announcement, Wednesday
US ADP employment change, JOLTS job openings, ISM Manufacturing, Wednesday
Federal Reserve rate decision, Wednesday
Eurozone S&P Global Manufacturing PMI, Thursday
US factory orders, initial jobless claims, trade, Thursday
Apple earnings, Thursday
Eurozone unemployment, Friday
US unemployment, nonfarm payrolls, ISM Services, Friday
Chicago Fed President Austan Goolsbee speaks, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 8:04 a.m. London time
S&P 500 futures fell 0.2%
Nasdaq 100 futures fell 0.5%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.5%
The MSCI Emerging Markets Index fell 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0659
The Japanese yen fell 0.1% to 157.98 per dollar
The offshore yuan was little changed at 7.2486 per dollar
The British pound fell 0.1% to $1.2477
Cryptocurrencies
Bitcoin fell 1% to $59,242.41
Ether fell 0.6% to $2,945.31
Bonds
The yield on 10-year Treasuries was little changed at 4.68%
Germany’s 10-year yield advanced five basis points to 2.58%
Britain’s 10-year yield advanced two basis points to 4.37%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck and Aya Wagatsuma.
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