Futures rise as oil drops; China data buffets Asia: markets wrap

Equity futures rose as oil dropped sharply on signs that the Biden administration is considering a massive release of crude from US reserves to combat inflation. Chinese data and regulatory concerns weighed on Asia stocks.

An MSCI Inc. gauge of Asia Pacific shares fell for the first day in three after data showing a contraction in Chinese manufacturing. US and European futures climbed. Benchmark US equity indexes fell earlier as talks between Russia and Ukraine stalled.

Reports that Washington is preparing a plan to release roughly a million barrels of oil a day helped reverse a rebound in crude, dragging it down toward $100 a barrel. The news comes ahead of an OPEC+ supply meeting later Thursday, where the cartel is expected to stick with its strategy of a modest output boost in May.

Chinese technology stocks are under pressure after the US Securities and Exchange Commission’s chief tamped down speculation that a deal is brewing to keep about 200 Chinese stocks from losing their listings.

Treasuries held gains, and a portion of the curve has pulled out of a brief inversion that raised concerns about an impending recession. The dollar mostly held a retreat and the yen stabilised from its recent slide.

Global stocks are on track for their worst quarter in two years amid concerns about a growth slowdown, with the war in Ukraine driving volatility in commodity markets. Investors are also unnerved by the prospect of a sharper withdrawal of stimulus, as the fastest inflation in a generation forces central banks to become more aggressive with interest-rate hikes. Markets now see a strong chance the Federal Reserve will lift rates by a half point at its May meeting.

“I don’t think it’s quite the bear market, but I would say, what is the upside of equities from here — I don’t think it’s that much,” Seema Shah, chief strategist at Principal Global Investors, said on Bloomberg TV. “The downside risks are so great. Not only is, of course, the geopolitical crisis going on, but then you have the Fed hikes.”

Kansas City Fed President Esther George, who has been among the more hawkish Fed officials during her tenure, said she favours a “steady, deliberate” series of rate hikes. Fed Richmond Bank President Thomas Barkin said he’s open to raising rates by a half point at the next meeting.

Officials from Ukraine and Russia are set to resume talks via video conference on Friday, according to a Ukrainian negotiator, though there was no immediate confirmation from Moscow. The discussions would follow in-person talks this week in Turkey that did not produce a short-term cease-fire or major progress toward a broader peace deal.

Germany said Russia has backed off its demand that natural gas purchases be made in rubles, with a payment mechanism being worked out.

Some key events to watch this week:

• China manufacturing, non-manufacturing PMIs, Thursday
• OPEC and non-OPEC ministerial meeting to discuss production targets, Thursday
• New York Fed President John Williams to speak, Thursday
• US jobs report, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 3 p.m. in Tokyo. The S&P 500 fell 0.6%
• Nasdaq 100 futures gained 0.4%. The Nasdaq 100 fell 1.1%
• Topix index fell 1.1%
• Australia’s S&P/ASX 200 Index fell 0.2%
• Kospi index rose 0.3%
• Hang Seng Index slipped 1.3%
• Shanghai Composite Index fell 0.5%
• Euro Stoxx 50 futures rose 0.4%

Currencies

• The Japanese yen was at 122.08 per dollar, down 0.2%
• The offshore yuan was at 6.3594 per dollar
• The Bloomberg Dollar Spot Index rose 0.1%
• The euro traded at $1.1165

Bonds

• The yield on 10-year Treasuries was at 2.35%
• Australia’s 10-year bond yield was at 2.84%, up five basis points

Commodities

• West Texas Intermediate crude fell 5.1% to $102.36 a barrel
• Gold was at $1 922.23 an ounce, down 0.6%