Stocks Subdued, US Futures Drop in Pre-Fed Caution: Markets Wrap

(Bloomberg) — Stocks in Asia made little headway Tuesday and US equity futures retreated, hampered by a challenging outlook for company profits and wariness ahead of a looming Federal Reserve interest-rate hike.

Most Read from Bloomberg

Shares wavered in Japan and South Korea while Australia gained modestly. S&P 500 and Nasdaq 100 contracts shed about 0.5% after a choppy US session.

Sentiment took a knock from a slide in retailer Walmart Inc. in extended trading on a disappointing profit outlook that could fan worries about corporate prospects as the US flirts with a recession amid tightening monetary settings.

Traders were also evaluating a move by e-commerce giant Alibaba Group Holding Ltd. to apply for a primary listing in Hong Kong, which could make its shares accessible by mainland Chinese investors.

The 10-year Treasury yield was at 2.78%. Traders are positioning for a wave of debt sales and a widely expected 75 basis points Fed rate rise Wednesday.

A dollar gauge is near the lowest level since early July. Crude oil retreated toward $96 a barrel. Bitcoin tumbled to brink of $21,000.

Markets are bracing not just for the Fed and any signals from Chair Jerome Powell, but also corporate reports from the likes of Apple and Alphabet. Other risks include ongoing disruptions to European gas supplies from Russia as well as China’s Covid curbs and property woes.

For Katerina Simonetti, an adviser at Morgan Stanley Private Wealth Management, the litany of risks exposes the vulnerability of the 6% rebound in global shares from June lows.

“This is most likely a bear market rally and there are significant risks still facing this market,” she said on Bloomberg Television. “We’re probably going to be seeing a lot of choppiness and potentially some further declines in the market before the year end.”

In contrast, Ed Yardeni, president of Yardeni Research, argues the S&P 500’s plunge last month to a 3,666.77 low likely marked the trough of the 2022 equity rout. He cites the resilience in corporate earnings and the still-healthy outlook for consumers and businesses even as the US economy slows.

Here are some key events to watch this week:

  • Alphabet, Apple, Amazon, Microsoft, Meta earnings due this week

  • Bank of Japan releases minutes from its June meeting, Tuesday

  • US new home sales, Conf. Board consumer confidence, Tuesday

  • IMF’s world economic outlook update, Tuesday

  • EU energy ministers emergency meeting, Tuesday

  • Fed policy decision, briefing, Wednesday

  • Australia CPI, Wednesday

  • US GDP, Thursday

  • Euro-area CPI, Friday

  • US PCE deflator, personal income, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.4% as of 9:37 a.m. in Tokyo. The S&P 500 rose 0.1%

  • Nasdaq 100 futures fell 0.5% The Nasdaq 100 fell 0.6%

  • Japan’s Topix Index was down 0.1%

  • South Korea’s Kospi index was little changed

  • Australia’s S&P/ASX 200 index rose 0.2%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was at $1.0225

  • The Japanese yen rose 0.2% to 136.39 per dollar

  • The offshore yuan was at 6.7514 per dollar

Bonds

Commodities

  • West Texas Intermediate crude was at $96.05 a barrel, down 0.7%

  • Gold was at $1,721.04 an ounce, up 0.1%

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.

Leave a Reply

Your email address will not be published. Required fields are marked *