Stocks, US equity futures fall amid cautious mood: markets wrap

An Asian stock index and US equity futures declined Wednesday as investors assessed the likely pace of further Federal Reserve monetary tightening and mounting signs of an economic slowdown.

The region-wide equity bourse shed about 0.5%, paced by slides in China and Hong Kong, where developer Logan Group Co. plunged — a careening stock price that again highlights the property crisis dragging on China’s economy.

The slump fed into wider risk aversion that saw S&P 500, Nasdaq 100 and European futures drop. Risk-sensitive currencies such as those in Australia and New Zealand slid. The 10-year Treasury yield held above 3%. Bitcoin wavered.

The latest data showed economic activity weakening from the US to Europe and Asia, underlining the delicate task the Fed faces in hiking interest rates to bring down high inflation without sparking a recession.

Investors will pour over Fed Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday for a sense of how hawkish the US central bank will be in the face of mounting economic challenges. A global rebound in equities from a June low has stalled ahead of the much-anticipated event.

“Globally we haven’t seen a deceleration like this that has been so synchronised in many decades,” Frances Stacy, director of strategy at Optimal Capital Advisors LLC, said on Bloomberg Television. “I don’t want to be directional” in picking trades, she added.

Federal Reserve Bank of Minneapolis President Neel Kashkari said inflation is very high and the central bank must act to bring it under control.

The Fed “is probably going to use this weekend to reiterate the fact that rates have more room to climb because they really want to bring inflation down,” Kelvin Tay, Asia-Pacific chief investment officer at UBS Global Wealth Management, said on Bloomberg Television.

Elsewhere, crude oil held gains above $93 a barrel, bolstered by shrinking US crude stockpiles and possible OPEC+ output cuts.

What to watch this week:

• US durable goods, MBA mortgage applications, pending home sales, Wednesday
• US GDP, initial jobless claims, Thursday
• Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
• ECB’s July minutes, Thursday
• Fed Chair Powell speaks at Jackson Hole, Friday
• US personal income, PCE deflator, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures dipped 0.3% as of 5:50 a.m. in London. The S&P 500 fell 0.2%
• Nasdaq 100 futures slipped 0.3%. The Nasdaq 100 was little changed
• Japan’s Topix index shed 0.1%
• Australia’s S&P/ASX 200 Index rose 0.5%
• South Korea’s Kospi index rose 0.4%
• Hong Kong’s Hang Seng Index fell 1.3%
• China’s Shanghai Composite Index dropped 1.4%
• Euro Stoxx 50 futures fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index climbed 0.1%
• The euro was at $0.9957, down 0.1%
• The Japanese yen traded at 136.40 per dollar, up 0.3%
• The offshore yuan was at 6.8717 per dollar, down 0.3%

Bonds

• The yield on 10-year Treasuries fell one basis point to 3.03%
• Australia’s 10-year yield increased four basis points to 3.62%

Commodities

• West Texas Intermediate crude was at $93.49 a barrel, down 0.3%
• Gold was at $1 747.38 an ounce