U.S. Futures Mark Time Before Fed; Yields Edge Up: Markets Wrap




 

(Bloomberg) -- U.S. equity futures entered a holding pattern on Wednesday while European stocks and Treasuries slipped as investors await the conclusion of the latest Federal Reserve meeting, with anticipation growing that policy makers will signal a readiness to lower rates.

Contracts for the three main U.S. gauges traded little changed while declines in real estate shares helped drag the Stoxx Europe 600 lower. Shares rose in Asia following the rally on Wall Street a day earlier, which was boosted when President Donald Trump tweeted he will sit down with Chinese President Xi Jinping at the G-20 summit next week. Hong Kong's shares led the region, advancing as much as 2.6%. The yield on 10-year Treasuries rose toward 2.08%, while that of Japan's benchmark hit a three-year low. The pound headed for a second day of gains.

As many of the world's biggest central banks signal a shift to easier policy, traders are weighing that against trade war fears and signs of cooling global growth. Trump said Tuesday that he had a "very good" phone conversation with Xi. The two leaders will hold an "extended meeting" at the G-20 summit on June 28-29 in Osaka and "our respective teams will begin talks prior to our meeting," Trump said on Twitter.

"At this stage, we are not getting as optimistic as maybe the stock market is about the headlines overnight," Laura Fitzsimmons, executive director for rates and FX sales at JPMorgan Chase & Co., told Bloomberg TV in Sydney about the developments on trade. "Stock markets can run for a little bit longer but as we get closer to the event itself the risk of disappointment will again appear."

Elsewhere, West Texas crude held on to Tuesday's gains after OPEC and its allies agreed to hold the next meeting to discuss oil-output cuts on July 1-2, resolving a monthlong dispute that highlighted divisions within the group. The Turkish lira fell on a report the Trump administration is weighing new sanctions on the country over its purchases of the Russian S-400 missile-defense system.

Here are some key events coming up:

The Fed, Bank of Japan and Bank of England all set monetary policy, along with central banks in Norway, Brazil, Taiwan and Indonesia.The Fed's two-day meeting ends Wednesday with a decision and press conference. Officials are expected to debate a rate cut to shelter the U.S. economy, in part, from the fallout caused by escalating trade disputes.Final May CPI data for Britain are due on Wednesday.U.K. retail sales are set for release on Thursday.

These are the main moves in markets:

Stocks

The Stoxx Europe 600 Index dipped 0.3% as of 9:30 a.m. London time.Futures on the S&P 500 Index fell less than 0.05%.France's CAC 40 Index fell 0.2%, the largest fall in a week.Hong Kong's Hang Seng Index surged 2.6% on the biggest jump in more than seven months.The MSCI Emerging Market Index gained 1.3%, the highest in six weeks on the largest rise in more than a week.

Currencies

The Bloomberg Dollar Spot Index fell less than 0.05%.The euro climbed 0.1% to $1.1204.The Turkish lira decreased 0.7%, the biggest dip in almost 15 weeks.The South Korean Won gained 0.8%.

Bonds

The yield on 10-year Treasuries climbed two basis points to 2.08%.Britain's 10-year yield rose four basis points to 0.845%.Japan's 10-year yield fell one basis point to -0.137%.Spain's 10-year yield rose four basis points to 0.433%.

Commodities

Gold declined 0.3% to $1,342.44 an ounce, the biggest drop in more than a week.West Texas Intermediate crude rose less than 0.05% to $53.92 a barrel.Iron ore increased 1.8%.

--With assistance from Juliette Saly and Adam Haigh.

To contact the reporter on this story: Todd White in Madrid at twhite2@bloomberg.net

To contact the editor responsible for this story: Samuel Potter at spotter33@bloomberg.net

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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