Equities rise while rate trajectory is reflected; Earnings in Dollars: Market Recap

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(Bloomberg) – Stocks rose on Wednesday, while Treasury yields stabilized as markets weighed the prospects for monetary tightening from the Federal Reserve. The dollar pushed higher.

Mining and energy stocks led gains in the European Stoxx 600 as oil rose. U.S. futures reduced an earlier advance, with contracts on the Nasdaq 100 rising slightly after Tuesday’s plunge.

Treasuries stabilized after a flight to safe havens pushed yields lower, while traders slowed the expected pace of Fed hikes. Minutes from the central bank’s latest meeting, scheduled for Wednesday, may shed some light.

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The European Central Bank is in the midst of a debate over how aggressively it should act to control inflation. New Zealand raised interest rates by half a percentage point for a second straight meeting and forecast more aggressive hikes to come.

Meanwhile, Russia’s central bank has brought forward the date of its next interest rate meeting by more than two weeks after government officials suggested further monetary easing may be needed to help stem the surge. ruble against the dollar. The government will edge closer to a potential default after the US Treasury Department said it would let a key sanctions waiver benefiting US investors expire.

Investors fear growth could slow significantly amid tighter monetary conditions to curb soaring inflation, with the war in Ukraine and lockdowns in China adding pressure by stifling supply chains. There are already signs of slowing US growth. Fed Bank of Atlanta President Raphael Bostic, who is one of the central bank’s dovish policymakers, urged his colleagues to proceed with caution.

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“Our central scenario remains that a recession can be avoided and that geopolitical risks will moderate over the course of the year, allowing equities to rise,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “But recent market declines have underscored the importance of being selective and considering strategies that mitigate volatility.”

In China, the country’s strict Covid policy trumps general measures to support growth and keep investors wary. Its commitment to Covid Zero means it is almost certain to miss its economic growth target by a wide margin for the very first time. The country’s central bank and banking regulator have urged lenders to increase lending as part of the latest effort to shore up the struggling economy.

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Read: Breaking stock market bond bolt shows recession anxiety mounting fast

Has enough bad news been priced into Chinese equities that could lead to an outperformance against its global peers for the rest of 2022? China is the focus of this week’s MLIV Pulse survey. Click here to participate anonymously.

Here are some key events to watch this week:

FOMC Minutes WednesdayECB Releases Financial Stability Review WednesdayBoK Rate Decision ThursdayUS GDP, Early Jobless Claims ThursdayUS Core PCE Price Index; personal income and expenses; wholesale inventory; University of Michigan Consumer Sentiment Friday

Some of the major movements in the markets:

Shares

The Stoxx Europe 600 rose 0.5% at 9:46 a.m. London time S&P 500 futures were little changed The index fell 1.7%

Currencies

The Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.6% to $1.0673 The Japanese yen fell 0.2% to 127.06 to the dollar The offshore yuan fell 0.4% at 6.6810 to the dollar Sterling was little changed at $1.2524

Obligations

The 10-year Treasury yield was little changed at 2.74% Germany’s 10-year yield fell two basis points to 0.95% Britain’s 10-year yield was little changed to 1.88%

Merchandise

Brent crude rose 1.1% to $114.78 a barrel Spot gold fell 0.5% to $1,857.04 an ounce

©2022 Bloomberg LP

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