Europe, US Futures Erase Gains; Asia Shares Fall: Markets Wrap

(Bloomberg) — European and US stock futures gave up small advances on Monday while Asian equities slid in choppy trading as investors ratcheted up forecasts for rate hikes from the Federal Reserve following hot inflation data.

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Contracts for the Euro Stoxx 50 and S&P 500 were little changed while those for the Nasdaq 100 gained 0.1%. The jittery tone in markets for risk assets followed Friday’s slump of more than 1% for both US benchmarks, which capped their worst week since December.

Shares in Australia, South Korea and China weighed on a gauge of the region’s stocks. Hong Kong’s Hang Seng Index approached levels that would wipe out its 2023. Japanese stocks fluctuated.

Investor concern over riskier assets comes in the wake of an unexpected acceleration in January of the personal consumption expenditures price index, the Fed’s favored inflation gauge. The PCE data release Friday prompted a swift repricing of interest rate forecasts, with traders now pricing US rates to peak at 5.4% this year, compared to a expectations held just a month ago of rates to peak at less than 5%.

“The Fed is data dependent and the markets are very Fed dependent,” Mehvish Ayub, senior investment strategist for State Street Global Advisors, said in an interview with Bloomberg Television. “The Fed is still very much focused on inflation at the expense of growth. We could see a much higher rate path, looking at 5.5% or 6%.”

The yen strengthened slightly against the dollar after a sharp fall on Friday. Bank of Japan Governor nominee Kazuo Ueda spoke again in the Japanese parliament without any large reverberation in markets. Inflation data released last week showed prices in the nation were rising at the fastest pace in four decades, placing pressure on the central bank to reassess its loose policy settings.

Yield on the 10-year Treasury was little changed in Asia on Monday after a jump of seven basis points Friday. Elevated yields continued to support the dollar, with a gauge of greenback slightly higher after rising 0.7% Friday.

The Australian 10-year yield rose five points while the New Zealand 10-year yield climbed three basis points and was near the highest level since November.

Data due later in the day will provided extra context for the global economic outlook. Eurozone economic and consumer confidence is due, along with durable goods data from the the US.

Elsewhere in markets, oil fell as concerns that the Fed will keep on raising rates eclipsed the latest disruption to supplies in Europe and optimism over a demand recovery in China. Gold was steady.

Iron ore sank following an order by Chinese authorities to cut production in its major steelmaking hub in a bid to curb pollution.

Key events this week:

  • Eurozone economic confidence, consumer confidence, Monday

  • US durable goods, Monday

  • US wholesale inventories, Conf. Board consumer confidence, Tuesday

  • China manufacturing PMI, non-manufacturing PMI, Caixin manufacturing PMI, Wednesday

  • Eurozone S&P Global Eurozone Manufacturing PMI, Wednesday

  • US construction spending, ISM Manufacturing, light vehicle sales, Wednesday

  • Eurozone CPI, unemployment, Thursday

  • US initial jobless claims, Thursday

  • Eurozone S&P Global Eurozone Services PMI, PPI, Friday

Some of the main moves in markets:


  • S&P 500 futures were little changed as of 3:35 p.m. Tokyo time

  • Nasdaq 100 futures rose 0.1%

  • Hong Kong’s Hang Seng fell 0.7%

  • The Shanghai Composite fell 0.4%

  • Japan’s Topix rose 0.2%

  • Euro Stoxx 50 futures were little changed


  • The Bloomberg Dollar Spot Index rose 0.1%

  • The euro fell 0.1% to $1.0536

  • The Japanese yen rose 0.1% to 136.33 per dollar

  • The offshore yuan was little changed at 6.9866 per dollar

  • The Australian dollar fell 0.4% to $0.6701


  • Bitcoin fell 0.7% to $23,388.49

  • Ether fell 0.4% to $1,635.37


  • The yield on 10-year Treasuries was little changed at 3.94%

  • Japan’s 10-year yield was little changed at 0.50%

  • Australia’s 10-year yield advanced five basis points to 3.87%


  • West Texas Intermediate crude fell 0.7% to $75.78 a barrel

  • Spot gold fell 0.1% to $1,808.55 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Akshay Chinchalkar.

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