US futures, Europe stocks fall amid inflation concern

Bloomberg

Equity-index futures and European stocks fell amid concern US inflation may have accelerated for a sixth month, with investors turning to the European Central Bank to gauge policy makers’ response to the war in Ukraine.
Contracts expiring this month on the S&P 500 and Nasdaq 100 indexes slid at least 0.2% each after US stocks posted the biggest daily advance since June 2020.
June futures on the gauges posted bigger losses. Overnight US gains fuelled by dip-buying echoed in Asia on Thursday, though they dissipated in Europe. Treasuries and the dollar advanced, while oil recovered.
Russia’s invasion of Ukraine and the resultant sanctions have sparked a disruption in commodity markets, sparking concern of inflation surging further and global growth sinking even lower.
Investors are debating whether the ECB, and the Federal Reserve next week, will indicate a slowdown in their path towards policy normalisation.
“It’s going to be a persistently higher inflation environment for the rest of 2022,” Erin Browne, multi asset portfolio manager at Pacific Investment Management Co, said on Bloomberg Television.
“What you’re starting to see is not only the first-degree hit of commodities, but the feed-through with some of the supply-chain challenges that are going to be exacerbated because of the conflict.”
Commodity markets are witnessing wilder swings than normal as investors struggle to gauge the full impact of the war on supply-demand dynamics. Oil rebounded after the
biggest one-day plunge in over three months as war headlines continue to rattle what one analyst called a “panic-stricken” market.
Market sentiment perked up after a top foreign policy aide to Ukraine’s president said the country was open to discussing Russia’s demand for neutrality as long as it’s given security guarantees.
An MSCI Inc gauge of Asia-Pacific stocks was on track for its biggest jump since November 2020, up more than 2%. Amazon.com Inc. surged more than 10% in late US trade after announcing a share split and $10 billion buyback plan.
Late in the US, the House voted to ban Russian energy imports and passed a long-delayed $1.5 trillion spending bill that would fund the US government through the rest of the fiscal year and provide $13.6 billion in aid to Ukraine.
Treasuries rallied on Thursday, with the 10-year rate shedding three basis points to 1.92%. The dollar was marginally higher amid losses for the euro.
In the meeting, ECB officials are expected to take a timeout from charting a path out of
extraordinary stimulus measures as they assess an unprecedented inflation shock and
an uncertain hit to economic growth from the Ukraine
conflict.
In cryptocurrencies, Bitcoin traded back below $40,000, after a sharp rally in digital tokens sparked by optimism about an impending US overhaul of crypto oversight that could provide regulatory clarity for investors.
The Stoxx Europe 600 fell 1.4% in London. Futures on the S&P 500 fell 0.7%. Futures on the Nasdaq 100 fell 1%. Futures on the Dow Jones Industrial Average fell 0.7%. The MSCI Asia Pacific Index rose 2.5%. The MSCI Emerging Markets Index rose 1.4%.
The Bloomberg Dollar Spot Index rose 0.1%. The euro fell 0.3% to $1.1043. The Japanese yen was little changed at 115.85 per dollar. The offshore yuan was little changed at 6.3284 per dollar. The British pound fell 0.2% to $1.3153.
The yield on 10-year Treasuries declined three basis points to 1.92%. Germany’s 10-year yield declined four basis points to 0.18%. Britain’s 10-year yield declined four basis points to 1.48%.
Brent crude rose 5.3% to $116.98 a barrel. Spot gold fell 0.3% to $1,985.60 an ounce.