Image: Reuters Berita 24 English - On Wednesday, better-than-expected results from Microsoft and Google helped calm jittery stock markets, ...
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| Image: Reuters |
Berita 24 English - On Wednesday, better-than-expected results from Microsoft and Google helped calm jittery stock markets, but bonds and the dollar were on edge ahead of a U.S. Federal Reserve meeting that is anticipated to result in another significant rate hike.
After Microsoft predicted robust revenue growth and Google parent Alphabet reported strong search engine ad revenues, Nasdaq 100 futures in Asia increased by 1.5 percent and S&P 500 futures by 0.9 percent.
A profit warning at retailer Walmart and weak U.S. economic statistics were combined with a 5% increase in Alphabet shares after hours and a 4% increase in Microsoft shares to provide some optimism.
Both European and FTSE futures saw gains of 0.2% and 0.3%, respectively. Nikkei in Japan increased by 0.4 percent.
Other places weren't as good. MSCI's largest index of shares outside of Japan from the Asia-Pacific region decreased by 0.7%.
Shares of SK Hynix, the second-largest chipmaker in the world, slumped 1.9 percent after the company warned that demand would likely slow as consumers curb spending.
With a potential increase in Russian gas supply cuts, the euro found it difficult to recover from an overnight decline. The International Monetary Fund has lowered its projections for global growth, and investors anticipate a dramatic increase in interest rates from the Federal Reserve in the coming hours.
According to Khoon Goh, head of Asia research at ANZ Bank in Singapore, "they have laid out their plan to hike rates to restrictive levels." They definitely want to avoid a painful landing, but they just cannot take the chance that inflation will continue to be high.
At 1800 GMT, the U.S. central bank is anticipated to announce a rate increase of 75 basis points (bps). A 100 bps increase is about 15% more likely than what futures suggest. The Treasury market has already priced in the fact that numerous abrupt near-term hikes will be detrimental to longer-term growth.
Benchmark On Wednesday, 10-year Treasury yields held steady at 2.8032 percent, falling short of two-year yields, which were at 3.0508 percent. [US/]
Consumer pricing data shocked on the downside for a change, albeit by a small margin, forcing investors to withdraw their bets on a 75 basis point rate hike in Australia next week. As a result, Australian bonds launched a relief rally on Wednesday.
To $0.6935, the Australian dollar slightly decreased. Futures for three-year bonds climbed 11 ticks. [AUD/]
WOBBLY EUROPE, CHINA
In addition to concerns about the impact of interest rates on economies, Europe is dealing with an energy crisis, and China is struggling with the restrictive COVID-19 laws and further setbacks for its already troubled real estate market.
On Tuesday, the euro experienced its worst session in a fortnight, falling 1% as Russia's Gazprom announced it will further reduce westbound gas flow and energy costs soared - with German year-ahead prices hitting a record. [NG/EU] [EL/DE]
In Asia, the dollar was stable at $1.0150. Japanese yen maintained steady at $136.96 per unit. [FRX/]
Due to fears that a growing boycott of mortgage payments on unfinished homes and the debilitating indebtedness of many developers could spread to the banking sector, the Chinese yuan was under pressure, and real estate stocks plummeted.
The announcement of a discounted share sale by major developer Country Garden caused the onshore CSI real estate index to drop by 2% and a Hong Kong index of mainland developers to drop by more than 5%.
According to Societe Generale analysts, "China's housing market is experiencing a slump, and the recent boycott of mortgage transactions is evidence of the depth of the crisis."
"This boycott's current scope is manageable, but there is a possibility of an escalation,"
With Brent crude futures at $104.58 per barrel and U.S. crude futures up 0.3 percent to $95.32 per barrel, oil prices remained stable.
At $1,717 per ounce, gold was stable.
