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Bloomberg
US equity-index futures and European stocks fell as investors worried about the prospects of interest-rates staying higher for longer and a deepening of geopolitical tensions. The dollar rebounded on haven appeal.
Contracts on the S&P 500 and Nasdaq 100 indexes dropped at least 0.6% each with US markets set to return from a holiday. European stocks fell as Bank of America Corp. to JPMorgan Chase & Co. predicted an end to its 2023 rally. Chinese technology shares declined amid a brewing price war among e-commerce firms. Treasuries slid across the curve.
A start-of-the-year rally in global stocks has fizzled, and the dollar resumed gains, after central bankers reaffirmed their will to combat inflation. That, and a stubborn trend in prices, have pushed traders to factor in another 75 basis points of rate hikes by the Federal Reserve by July. They also pruned their bets for the first US rate cut: swaps now expect a 20 basis-point reduction by year-end, compared with a 50 basis-point move seen earlier this month.
The dollar rose for the first time in three days, trading above its 50-day moving average. Yet technical patterns suggest the greenback isn’t fully out of the woods yet. While the Bloomberg Dollar Spot Index is heading for the best monthly gain since September, it has just completed the so-called “death cross†between its 100-day and 200-day averages, signalling the downtrend remains intact.
The Stoxx 600 gauge fell, dragged by technology and commodity stocks. In China, JD.com led a decline among technology peers following a report that the e-commerce firm is planning a subsidy campaign as it ratchets up a price war against rivals.
The Japanese 10-year yield briefly rose above the central bank’s 0.5% yield curve control target for the first time since January. Investors are readying to hear from Kazuo Ueda, the nominee for the Bank of Japan governorship, who is due to face confirmation hearings in parliament on Friday.
Benchmark two-year yields on New Zealand government bonds rose on Tuesday while Australian yields ticked higher. Economists expect the Reserve Bank of New Zealand to hike its policy rate by 50 basis points on Wednesday.
Elsewhere, trading of oil was choppy as investors weighed the possibility of further monetary tightening against signs of improving demand from China.
The Stoxx Europe 600 fell 0.1% and S&P 500 futures fell 0.6%. While Nasdaq 100 futures fell 0.8%, futures on the Dow Jones Industrial Average also drop 0.5%.
The MSCI Asia Pacific Index fell 0.8% and the MSCI Emerging Markets Index also plunges 0.9% and the Bloomberg Dollar Spot Index rose 0.2% and the euro fell 0.3% to $1.0659.
The Japanese yen drops 0.3% to 134.63 per dollar.