Stocks, futures steady as traders assess fed views: markets wrap

Asian stocks and US equity futures were steady Thursday as investors assessed mixed US economic data and comments from a Federal Reserve official that the central bank is on course to taper stimulus support.

Equities edged up in Japan but slipped in Hong Kong and China, where Beijing’s regulatory curbs continue to dominate the agenda. The S&P 500 fell from a record overnight, led lower by energy shares, while the technology sector proved more resilient. US and European contracts were little changed.

Vice Chairman Richard Clarida said the Fed is on track for a liftoff in interest rates in 2023 and an announcement later this year on paring bond purchases. Clarida’s comments helped to cement money-market bets for an initial rate hike in early 2023. Treasury yields advanced and the dollar held a climb.

Oil steadied below $70 a barrel after a three-day slump exacerbated by the coronavirus resurgence.

Clarida painted an upbeat picture of the outlook while acknowledging that the rapid spread of the delta virus strain poses a downside risk. Global stocks remain close to all-time highs as investors assess the Fed outlook, robust earnings and the challenges to economic reopening from Covid-19. China’s regulatory crackdown on private industries also remains in focus.

The latest economic data showed a much softer-than-expected ADP employment report but a record expansion for US service industries. American jobs numbers are due Friday.

“Employment getting back to full capacity, is going to be an important marker for the Fed to start to taper,” Erin Browne, multi-asset strategies portfolio manager at Pacific Investment Management Co., said on Bloomberg Television. “You’re going to continue to see growth numbers look quite robust — remember, we both have monetary support which is fading but still out there, as well as fiscal support across developed markets which are supporters for growth.”

Among other Fed comments, St. Louis President James Bullard reiterated the view that the jump in US inflation will be temporary but added it will be “more persistent” than many expect. Dallas President Robert Kaplan called for a gradual reduction in bond purchases soon as long as there’s progress in jobs numbers.

In cryptocurrencies, the second-largest coin Ether was around a two-month high following a software upgrade that will trim the pace at which fresh tokens are minted. Elsewhere, the Philippine peso slid the most since 2013 amid speculation the central bank will cut the reserve requirement ratio for banks.

Meanwhile, global Covid-19 cases topped 200 million in the 18-month pandemic. Israel, one of the world’s most vaccinated nations, called on employers to switch to work-at-home and warned that it may have to impose new lockdowns.

Here are some key events to watch this week:

• Bank of England is expected to keep its benchmark interest rate and its bond-buying target unchanged Thursday
• Reserve Bank of India monetary policy decision, briefing Friday
• The US jobs report is expected to show another robust month of hiring Friday

For more market analysis read our MLIV blog.

These are the main moves in markets:

Stocks

• S&P 500 futures were up 0.1% as of 7 a.m. in London. The S&P 500 fell 0.5%
• Nasdaq 100 contracts rose 0.1%. The Nasdaq 100 rose 0.2%
• Japan’s Topix index rose 0.4%
• Australia’s S&P/ASX 200 Index added 0.2%
• South Korea’s Kospi was flat
• Hong Kong’s Hang Seng Index dipped 0.5%
• China’s Shanghai Composite Index fell 0.4%
• Euro Stoxx 50 futures were little changed

Currencies

• The Japanese yen was at 109.66 per dollar, down 0.2%
• The offshore yuan traded at 6.4624 per dollar
• The Bloomberg Dollar Spot Index was flat
• The euro was at $1.1837

Bonds

• The yield on 10-year Treasuries rose about one basis point to 1.20%
• Australia’s 10-year bond yield climbed more than one basis point to 1.16%

Commodities

• West Texas Intermediate crude was at $68.15 a barrel
• Gold was at $1 808.95 an ounce