S&P500 Futures eases below 4,600, yields edge higher on mixed Fed concerns, China news
- Market sentiment portrays pre-Fed anxiety amid added fears from China.
- S&P500 Futures snap two-day uptrend while easing from one-week high, mildly offered of late.
- US Treasury bond yields remain firmer amid fears about Fed policy pivot, US-China tension, Asian stocks edge lower.
- Light calendar adds barriers to market’s momentum ahead of the FOMC, Powell’s speech will be crucial for clear directions.
The risk appetite fades the previous optimism amid a typical pre-Fed positioning on early Wednesday. Adding strength to the market’s consolidation could be the recent risk-negative headlines surrounding China.
While portraying the mood, S&P500 Futures print the first daily loss in three around 4,595 by retreating from the one-week high marked the previous day. On the same line, the US 10-year and two-year Treasury bond yield print mild gains around a two-week high registered Tuesday, close to 3.90% and 4.89% in that order by the press time.
It’s worth noting that stocks in the Asia-Pacific zone grind lower led by the downbeat performance of shares in China, Hong Kong and Shanghai. Furthermore, the US Dollar Index (DXY) regains upside momentum after reversing from a two-week high while commodities pare recent gains with mild losses by the press time.
Talking about the main catalysts, the recently firmer US data pushed back dovish concerns about the Federal Reserve (Fed) and prod the optimists whereas the headlines from the US Senate suggest fresh challenges to the US-China ties. It should be noted that Microsoft’s quarterly results, published after the US market’s close, weren’t impressive and hence exert additional downside pressure on the risks.
That said, Reuters reports that US 100-member Senate backed the amendment to the National Defense Authorization Act (NDAA) by 91 to 6. This means that the policymakers back legislation requiring US companies to report investment in China technologies like semiconductors and artificial intelligence (AI), which in turn spoils the market sentiment and challenges the previous optimism backed by hopes of more stimulus from China.
Elsewhere, the US Conference Board (CB) Consumer Confidence jumped to 117.0 for July from 110.10 prior (revised) versus market forecasts of 112.10. The survey details unveiled that the one-year consumer inflation expectations edged lower to 5.7% while the Present Situation Index and Consumer Expectations Index rose to 160.0 and 88.3 in that orders for the said month. That said, the US Housing Price Index for May reprinted the 0.7% MoM growth compared to analysts’ estimation of 0.2% whereas the S&P/Case-Shiller Home Price Indices also repeated the -1.7% YoY figures for the said month versus -2.2% expected.
It should be noted, however, that the previously released activity data from major economies and China’s readiness for heavy stimulus keep the bulls hopeful amid expectations that the Fed won’t be able to announce more rate hikes past July.
Also read: Forex Today: Upbeat markets and a weaker Dollar ahead of Fed