(June 8): Asian stocks look set for a mixed open Wednesday after U.S. equities treaded water near a record ahead of key inflation data. The 10-year U.S. Treasury yield fell to a one-month intraday low.
Futures slipped in Japan but edged higher in Australia and Hong Kong. U.S. equity contracts were steady in early trading after the S&P 500 ended little changed just shy of its May 7 record close. A slide in biotech stocks after Monday’s rally offset gains in megacap technology shares.
The focus remains on Thursday’s report on U.S. consumer prices, which may affect perceptions of when the Federal Reserve is likely to start discussing tapering asset purchases. The dollar held an advance.
Traders will be alert for any repercussions after passage of a bill to invest almost US$250 billion in bolstering U.S. manufacturing and technology to meet the challenge from China. Elsewhere on the mainland, regulators have instructed major creditors of China Evergrande Group to conduct a fresh round of stress tests on their exposure to the world’s most indebted developer.
The debate over whether inflation will prove sticky and prompt central banks to pare stimulus earlier than expected remains key for investors. While volatility is evident in the speculative fringe, such as meme shares and cryptocurrencies, global stocks are near an all-time high and Treasury yields have eased for three successive weeks. The overall picture suggests faith in the Fed’s assurances that price pressures will prove transitory.
“The tight trading ranges seen so far this month reflect the cautious mood in the market ahead of the inflation numbers,” said Fiona Cincotta, senior financial markets analyst at City Index. “Whilst the Fed reassures that this spike in inflation is temporary, policy makers will need to be out in their droves to calm the market.”
Oil resumed its rally to top US$70 a barrel in New York as investors grow more confident that the recovery from the pandemic will help demand. Bitcoin remains under pressure, trading at about US$33,600 after a retreat this week.
Here are key events to watch this week:
1.U.S. consumer price index on Thursday.
2.Apple holds its annual Worldwide Developers Conference through June 11.
3.European Central Bank decision on Thursday and press conference with President Christine Lagarde.
4.Iran nuclear deal talks reconvene in Vienna Thursday.
5.Group of Seven leaders’ summit starts in Cornwall, England Friday.
These are some of the main moves in markets:
Stocks
S&P 500 futures were flat as of 8:50 a.m. in Tokyo. The index rose less than 0.1%
Nasdaq 100 futures were little changed. The gauge climbed less than 0.1%
Nikkei 225 futures fell 0.2%
Australia’s S&P/ASX 200 index futures rose 0.1%
Hang Seng Index futures rose 0.1%
Currencies
The Japanese yen was at 109.48 per dollar
The offshore yuan was at 6.4006 per dollar
The Bloomberg Dollar Spot Index was little changed
The euro traded at US$1.2173
Bonds
The yield on 10-year Treasuries declined four basis points to 1.53%
Commodities
West Texas Intermediate crude was at US$70.05 a barrel
Gold was at US$1,893.79 an ounce-BLOOMBERG