Stocks Steady as Growth Fears Anchor Treasuries: Markets Wrap

(Bloomberg) -- Stocks struggled to make headway in Asia on Tuesday and bonds rose, a pattern reflecting concerns about the outlook for economic growth as central banks hike interest rates to curb runaway inflation.

MSCI Inc.’s Asia-Pacific equity index was little changed but off session lows, spurred by a climb in Hong Kong real-estate shares after the territory floated the possibility of reducing stamp duty on some home purchases.

S&P 500 and Nasdaq 100 futures weathered a blow to sentiment from poor earnings at chipmaker Nvidia Corp. but the gains in the contracts were modest.

Australian debt pushed higher and Treasuries held an advance. An inversion in the US yield curve highlights expectations that further aggressive Federal Reserve interest-rate hikes could spark a recession. The dollar was steady.

Oil edged down toward $90 a barrel, gold slipped and Bitcoin fell from $24,000.

A near-10% rebound in global stocks from bear-market lows appears to have paused as investors await US inflation data due Wednesday. The figures will shape views on how aggressively the Fed will have to raise borrowing costs and whether a shift to rate cuts later next year is a realistic possibility.

The day of reckoning for the equity bounce may well come when the market realizes “the Fed is not going to pivot on interest-rate hikes in early 2023, inflation should remain pretty persistent and rate hikes should continue,” Saira Malik, chief investment officer at Nuveen, said on Bloomberg Television. 

Consumer expectations for US inflation over the coming years declined sharply in the latest survey by the Fed Bank of New York. But almost all inflation measures continue to run well above the Fed’s 2% target.

Much “economic softness may still be a head of us,” Mona Mahajan, senior investment strategist at Edward Jones & Co., said on Bloomberg Television, adding “we don’t think there is scope for really a sustained rally until the inflation story comes into check.” 

What to watch this week:

• US CPI data, Wednesday
• Chicago Fed President Charles Evans and his Minneapolis counterpart Neel Kashkari due to speak, Wednesday
• US PPI, initial jobless claims, Thursday
• San Francisco Fed President Mary Daly is interviewed on Bloomberg Television, Thursday
• Euro-area industrial production, Friday
• US University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.3% as of 12:55 p.m. in Tokyo. The S&P 500 fell 0.1%
• Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 0.4%
• Japan’s Topix index fell 0.7%
• Australia’s S&P/ASX 200 index rose 0.1%
• South Korea’s Kospi index increased 0.1%
• Hong Kong’s Hang Seng index rose 1%
• China’s Shanghai Composite Index rose 0.3%
• Euro Stoxx 50 futures were down 0.1%

Currencies

• The Bloomberg Dollar Spot Index shed 0.1%
• The euro was at $1.0196
• The Japanese yen was at 134.89 per dollar
• The offshore yuan was at 6.7616 per dollar

Bonds

• The yield on 10-year Treasuries was at 2.75%
• Australia’s 10-year yield dropped four basis points to reach 3.17%

Commodities

• West Texas Intermediate crude fell 0.2% to $90.61 a barrel
• Gold was at $1,786.19 an ounce, down 0.2%

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