US, Europe futures up; Aussie jumps on rate hike: markets wrap

US and European equity futures rose Tuesday as investors weighed the impact of a global wave of monetary tightening to tackle inflation.

European contracts added about 1% while those for the S&P 500 and Nasdaq 100 made more modest gains. Dip-buying in the technology sector led US equities higher Monday after a bruising April for markets.

In Australia, the central bank increased interest rates by more than many had expected, sparking a slide in bonds and a jump in the local currency. The nation’s three-year yield topped 3% for the first time since 2014.

Next up is the Federal Reserve on Wednesday, which is poised for its biggest rate hike since 2000. The UK is expected to raise borrowing costs a day later.

Treasuries held a slide, with the 10-year yield near 3% and real yields back above zero. A dollar gauge slipped while remaining in sight of a two-year high.

Asia was whipsawed by big swings in Alibaba Group Holding Ltd. in Hong Kong on concerns about the status of co-founder Jack Ma. The worries faded and the city’s bourse stabilised as officials rolled back Covid-related curbs.

The key question for markets remains whether the global economy can weather the shift toward tighter financial conditions. China’s Covid lockdowns and Russia’s war in Ukraine also present growth risks.

“Our view remains that the right strategy right now is to position for inflation — a clear and present fact — rather than recession, which is still only a possibility,” Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, wrote in a note.

Elsewhere, oil fluctuated around $105 a barrel. Traders weighed demand for refined products against challenges from the virus-induced slowdown in China.

Key events this week:

• US factory orders, durable goods, Tuesday
• Fed rate decision, briefing with Chair Jerome Powell, Wednesday
• EIA crude oil inventory report, Wednesday
• Bank of England rate decision and briefing, Thursday
• OPEC+ convenes virtually for a regular meeting, Thursday
• US April jobs report, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 7:11 a.m. in London. The S&P 500 rose 0.6%
• Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 1.7%
• Australia’s S&P/ASX 200 Index shed 0.4%
• South Korea’s Kospi index declined 0.2%
• Hong Kong’s Hang Seng Index was flat

Currencies

• The Japanese yen was at 130.09 per dollar
• The offshore yuan traded at 6.6877 per dollar, down 0.2%
• The Bloomberg Dollar Spot Index fell 0.1%
• The euro was at $1.0508

Bonds

• The yield on 10-year Treasuries was at 2.99%

Commodities

• West Texas Intermediate crude was at $105.08 a barrel
• Gold was at $1 861.17 an ounce