American equity futures rose on Wednesday after more central-bank officials joined the chorus predicting that inflationary pressures are transitory, soothing concerns that monetary tightening may start sooner than expected.
Contracts on the S&P 500 and Nasdaq 100 signaled stocks could move higher today following a drop in U.S. benchmarks Tuesday. Treasuries and the dollar were steady, with attention now turning to tomorrow’s jobs and GDP data for more clues on the outlook for the economy.
The Stoxx Europe 600 index fluctuated as the banks sub-index declined amid worries about a new tax targeting Swedish lenders. Miners also dropped after China ramped up its efforts to curb commodity prices. Iron ore slipped along with most industrial metals.
Signs of quickening inflation are giving investors pause for thought as they consider the outlook for the exceptional stimulus buoying markets. Still, central bankers around the globe are playing down the risk of rising prices. The question is how long the Fed and other central banks can keep stimulative monetary policy in place if economic data continue to show price pressures.
“What we keep hearing from the Fed is that they’re going to take a very different approach to inflation this time around,” Kristina Hooper, Invesco chief global market strategist, said on Bloomberg TV. “The Fed is likely to let the punchbowl stay out a lot longer. The big fear about inflation is that the Fed would act.”
Fed Vice Chair Richard Clarida said price pressures in the U.S. would largely be transitory, though he added officials may be ready to begin discussing how to taper asset purchases in “upcoming meetings”. Bank of France Governor Francois Villeroy de Galhau talked down stimulus adjustments anytime soon, while European Central Bank Executive Board member Fabio Panetta said he sees no signs of sustained inflation that would allow for a reduction in bond purchases.
Elsewhere, oil in New York retreated below $66 a barrel, while gold erased 2021 losses. Bitcoin rallied back above the $40,000 level as cryptocurrencies recover some of the ground lost in this month’s volatile rout.
Here are some events this week:
- CEOs of the largest U.S. banks, including JPMorgan and Goldman Sachs, will testify before lawmakers in the Senate Banking and House Financial Services committees Wednesday.
- U.S. initial jobless claims, GDP, durable goods, pending home sales on Thursday.
These are some of the main moves in markets:
- Futures on the S&P 500 rose 0.3% as of 8:12 a.m. New York time
- Futures on the Nasdaq 100 rose 0.5%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 was little changed
- The MSCI World index was little changed
- The Bloomberg Dollar Spot Index was flat
- The euro fell 0.2% to $1.2228
- The British pound was little changed at $1.4164
- The Japanese yen fell 0.1% to 108.89 per dollar
- The yield on 10-year Treasuries was little changed at 1.56%
- Germany’s 10-year yield declined four basis points to -0.20%
- Britain’s 10-year yield declined three basis points to 0.75%
- West Texas Intermediate crude fell 0.5% to $66 a barrel
- Gold futures rose 0.4% to $1,909 an ounce
— With assistance by Macarena Munoz Montijano, and Andreea Papuc