European and US stock futures rose as investors weighed fresh inflation data while Chinese equities were broadly lower on concerns of sputtering growth.
An advance for contracts tied to the region-wide Euro Stoxx 50 index indicated the first gain in two days for the gauge. Futures for the S&P 500 rose around 0.2% after the benchmark closed 0.4% higher Wednesday. Nasdaq 100 futures advanced by a similar margin after the tech-heavy index rose 1.1% to close at the highest level since August.
Mainland China shares and Hong Kong’s Hang Seng Index fell after Beijing reported slower-than-expected consumer inflation, while producer prices continued to sink. Chinese bonds rallied on easing bets. Japanese shares fell, weighed down by a stronger yen, while Australian stocks also declined.
The dollar held losses following a drop in Treasury yields Wednesday, which held into Asian trading. The policy-sensitive two-year Treasury yield closed the US session down 11 basis points after headline inflation eased to 4.9% in April. That was the first reading below 5% in two years and below consensus expectations. Core inflation remained at 5.5%.
“The Fed’s policy is working — inflation is coming down, but inflation is still too high,” Valentine Ainouz, head of global fixed income strategy for Amundi Institute, said in an interview with Bloomberg Television. “I expect the Fed to maintain rates higher for longer than the market expects.”
Treasury Secretary Janet Yellen met with Group of Seven finance ministers in Japan, where she said a US debt default would undermine the nation’s global leadership. The potential for the first-ever US default remained a live issue with little progress in talks between President Joe Biden and congressional Republicans. The president and House Speaker Kevin McCarthy plan to hold another meeting on Friday.
Meanwhile, the yield on China’s 10-year government bonds fell to about 2.7%, set for the lowest level since November. This also came as China asked commercial banks to cap rates offered on some deposits to lower lenders’ funding costs. The central bank will offer more cues on its policy next week when a medium-term loan facility gets renewed.
The weaker-than-expected Chinese inflation data is “indicative of a more uneven recovery,” said Thomas Taw, head of APAC iShares investment strategy for BlackRock. “The major issue for investors thinking of going back into China is the geopolitical risk.”
In Hong Kong, the cost to borrow overnight reached a 16-year high, narrowing the interest gap with the US. The local currency is pegged to the dollar.
Elsewhere in the region, Adani Enterprises, billionaire Gautam Adani’s flagship, said it will hold a board meeting later this week to consider selling stock. The company’s shares have halved this year after accusations of fraud from short seller Hindenburg Research. The group’s US-currency bonds rose Thursday amid a broad gain in investment-grade dollar notes in Asia.
An illiquid corner of swaps insuring Credit Suisse Group AG debt has surged back to life. They’ve had their biggest jump this week since UBS Group AG agreed to buy Credit Suisse in March, as funds including FourSixThree Capital and Diameter Capital Partners pile in, according to people familiar with the matter.
In commodity markets, gold edged up as signs that US inflation is cooling fueled speculation that the Federal Reserve will soon pause tightening. Iron ore futures dipped below $100 a ton.
Oil advanced for the fourth session in five as easing US price pressures weakened the dollar and traders assessed interruptions to supplies.
Key events this week:
- UK BOE rate decision, industrial production, GDP, Thursday
- US PPI, initial jobless claims, Thursday
- Group of Seven finance minister and central bank governors meet in Japan, Thursday
- US University of Michigan consumer sentiment, Friday
- Fed Governor Philip Jefferson and St. Louis Fed President James Bullard participate in panel discussion on monetary policy at Stanford University, Friday.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 3:08 p.m. Tokyo time. The S&P 500 rose 0.4%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 1.1%
- Japan’s Topix fell 0.1%
- Australia’s S&P/ASX 200 was little changed
- Hong Kong’s Hang Seng fell 0.7%
- The Shanghai Composite fell 0.2%
- Euro Stoxx 50 futures rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0976
- The Japanese yen was little changed at 134.27 per dollar
- The offshore yuan was little changed at 6.9398 per dollar
Cryptocurrencies
- Bitcoin fell 1.3% to $27,520.27
- Ether fell 1.5% to $1,830.92
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.43%
- Australia’s 10-year yield declined five basis points to 3.40%
Commodities
- West Texas Intermediate crude rose 0.9% to $73.23 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
