Stocks struggle, bonds dip

Bloomberg

Stocks in Europe and the US equity futures struggled for direction amid a debate over the scale of central bank monetary policy tightening needed to fight the inflation.
Europe’s Stoxx 600 Index surrendered early gains as investors assessed cheaper valuations against the record jump in euro-zone consumer prices. Among individual moves, bootmaker Dr Martens Plc surged after its pretax profit beat estimates. Contracts on the S&P 500 and the Nasdaq 100 fluctuated.
European bonds fall and Treasuries extended a decline, pushing 10-year yields closer to 2.9% as traders raised bets on Federal Reserve interest-rate hikes. The dollar advanced against major peers.
Oil rises as investors assessed the future of Opec+ unity, just as ministers from the group prepare to meet on Thursday to discuss its supply policy for July. Crude advanced about 10% in May, stoking more inflation worries.
Concerns that central-bank rate hikes may induce a recession are keeping investors guessing about the outlook for the economy as rising food and energy costs squeeze consumers, and volatility has picked up.
“US markets, and by default, global markets, will still indulge in schizophrenic swings in market sentiment as the Fomo dip-buyers become increasingly frantic in their attempts to pick a cyclical low in equity markets,” said Jeffrey Halley, a senior market analyst at Oanda Asia Pacific Pte.
Asian equities traded mixed, with stocks climbing in Japan as the yen weakened toward 130 per dollar. A pullback in technology stocks and reopening challenges were a drag in Hong Kong. Sluggish Chinese manufacturing data and the government’s pursuit of Covid Zero weighed on shares and the yuan.
President Joe Biden used a rare meeting with Federal Reserve Chair Jerome Powell to declare that he’s respecting the central bank’s independence – while simultaneously shifting responsibility for taming decades-high inflation ahead of the November midterms. The meeting came ahead of US payroll numbers on Friday.
“There are heightened concerns around inflation and where central banks are likely to go trying to combat inflation,” Kristina Hooper, Invesco Advisers chief global markets strategist, said on Bloomberg Radio. “This has gone from just an inflation scare to a growth scare. Uncertainty has grown.”
The Stoxx Europe 600 falls 0.3% as of 9:07 am London time and futures on the S&P 500 were little changed.
While futures on the Nasdaq 100 drop 0.2%, futures on the Dow Jones Industrial Average rise as much as 0.3%
The MSCI Asia Pacific Index declines 0.1% and the MSCI Emerging Markets Index also declines 0.7%.
The Bloomberg Dollar Spot Index was little changed and the euro was unchanged at $1.0734.

While the Japanese yen falls 0.5% to 129.31 per dollar, the offshore yuan drops 0.3% to 6.6969 per dollar and the British pound was little changed at $1.2608.
The yield on 10-year Treasuries advanced two basis points to 2.86% and Germany’s 10-year yield advanced one basis point to around 1.13%. Britain’s 10-year yield advanced three basis points to 2.13%.
Brent crude advances 1.8% to $117.71 a barrel and spot gold declines as much as 0.1% to $1,835.20 an ounce.