US stock futures rallied and Asian stocks showed mixed performance on Wednesday after markets plunged overnight on a tech sell-off and Treasury Secretary Janet Yellen’s comments on interest rates. The dollar kept gains.
Contracts for the S&P 500 rallied after gains in the commodities, financial and industrial sectors, which helped the indicator to reduce losses. Futures on the Nasdaq 100 stabilized after a weaker close on the index amid declining quotes from Apple Inc., Tesla Inc. and Amazon.com Inc., European futures rose. Australia shares rose and Hong Kong fell. Several key Asian markets were closed for the holidays.
Yellen said rates are likely to rise as government spending rises and the economy responds with faster growth – comments economists take for granted. In a subsequent interview, the former Federal Reserve chairman said she did not forecast or recommend rate hikes.
Commodities hit their highest level in nearly a decade as a result of a recovery in pandemic fuel demand. Copper cost about $ 10,000 per tonne and oil topped $ 66 per barrel. The New Zealand dollar outperformed all of its Group 10 peers on a strong employment record. The yield on 10-year Treasuries rose slightly.
The debate over whether government spending can spur excessive inflation continues as stock prices hover around their highest levels in two decades. Investors were reluctant to continue the rally despite strong corporate earnings. While the Fed has assured markets that interest rates will remain at current lows throughout the recovery period, the strengthening data has raised concerns that policymakers may take measures to tighten rates earlier than expected.
“The market will continue to focus on recovering growth and how Covid develops over time,” Cecilia Chan, chief investment officer of HSBC Asset Management Asia Pacific, told Bloomberg Television. She downplayed concerns about inflation and added that “the central bank will remain soft.”
Meanwhile, India continues to face the devastating wave of Covid-19. The country’s stocks and bonds rose after the central bank approved Rs 500 billion ($ 6.8 billion) in liquidity for banks to support lending to vaccine makers, hospitals and healthcare providers.
Here are some key events to watch this week:
- US ADP employment change is expected on Wednesday.
- Chicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College on Wednesday. Cleveland Fed President Loretta Mester gives a virtual speech at the Boston Economic Club.
- Bank of England interest rate decision on Thursday.
- The April US employment report will be released on Friday.
Some of the major moves in the markets are:
- S&P 500 futures are up 0.2% as of 7:38 am in London. S&P 500 lost 0.7%
- Nasdaq 100 Contracts Gain Less Than 0.1% After Index Falls 1.9%
- Australian S & P / ASX 200 up 0.4%
- Hong Kong Hang Seng Index Falls 0.5%
- Euro Stoxx 50 Futures Gain 0.9%
- The Japanese yen is trading at 109.42 per dollar.
- The offshore yuan was at 6.4889 per dollar.
- Bloomberg Spot Dollar Index Gains 0.1%
- The euro was trading at $ 1.2006.
- The yield on the 10-year Treasury bond rose about one basis point to 1.60%.
- The yield on Australia’s 10-year bonds fell two basis points to 1.74%.
- West Texas Intermediate crude rose 0.8% to $ 66.21 a barrel
- Gold fell 0.1% to $ 1,776.77 an ounce.
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