(Bloomberg) — European futures rose 0.2%, shrugging off declines in Asia, as investors braced for key U.S. payrolls data and more clues on interest rate cuts from minutes of the Federal Reserve meeting.
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Asian stocks snapped a three-day winning streak, weighed down by Chinese shares in Hong Kong. Technology stocks fell on concerns about the country’s consumer outlook, Walmart Inc.’s planned sale of its stake in JD.com Inc. and poor results from key players such as Kuaishou Technology. U.S. and European stock contracts rose.
The dollar steadied after weakening for three sessions as markets also await Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on Friday for further clues on the size and timing of interest rate cuts. The Bloomberg Dollar Spot Index rose after three days of declines as the Thai baht rose to its highest level since July 2023 ahead of the country’s central bank’s decision.
“The moves we saw in the morning session in Asia today are indicative of investors’ cautious wait for Jerome Powell’s message at Jackson Hole, as well as the revision of the US payrolls benchmark and August survey data that could cast doubt on the underlying strength of the US labor market,” said Homin Lee, senior macro strategist at Banque Lombard Odier & Cie SA in Singapore. “We don’t think these two developments will be game-changers for the region’s market in the end.”
Stocks also fell in Tokyo, shrugging off improved export data. Japanese stocks fell as the yen's gains raised concerns about earnings. The local currency steadied around 145 against the dollar after rising on Tuesday.
Elsewhere in Asia, authorities in Indonesia and Thailand are expected to keep interest rates unchanged on Wednesday as they weigh uncertainties over political transitions awaiting imminent Federal Reserve easing. Australian 10-year bond yields fell six basis points in morning trading.
In addition to flows and positioning, the recent rally was also driven by bets that the Federal Reserve will signal it is getting closer to cutting rates, prompting bond traders to take on record amounts of risk as they anticipate a Treasury market rally.
The S&P 500 fell below 5,600 points on Tuesday as Nvidia Corp., which had risen nearly 25% in six days, led losses among large-cap companies. Yields on 10-year Treasury notes were little changed after falling six basis points. Brent crude fell for a third straight day on a possible cease-fire in Gaza and growing concerns about the outlook for global demand, while gold hit a new record.
A gauge of European blue-chip futures rose 0.2%, while U.S. futures rose 0.1%.
Janney Montgomery Scott’s Dan Wantrobski says he continues to anticipate continued stock market strength in the near term, but remains on “high alert” for another potentially larger corrective wave moving through the August-October period.
“From a timing perspective, we are heading into a window where there may be a high probability of a liquidity event occurring, and the charts, trader positioning and sentiment are all very vulnerable right now in our view,” Wantrobski said. “I smell a ‘bull trap’ ahead. But I hope I’m wrong.”
Key events of this week:
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U.S. Federal Reserve minutes and BLS preliminary annual payrolls review, Wednesday
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Eurozone HCOB PMI, consumer confidence, Thursday
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The ECB will publish a report on the July interest rate decision on Thursday
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US initial jobless claims, existing home sales and S&P global PMI on Thursday
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Japan CPI, Friday
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Bank of Japan Governor Kazuo Ueda will attend a special session in the Japanese parliament to discuss the July 31 rate hike on Friday.
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US New Home Sales, Friday
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Federal Reserve Chairman Jerome Powell speaks at the Jackson Hole Symposium in Wyoming on Friday
Some of the main movements in the markets:
Stocks
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S&P 500 futures were up 0.1% as of 6:46 a.m. London time.
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Japan's Topix index fell 0.4%
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Australia's S&P/ASX 200 index was little changed
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Hong Kong's Hang Seng fell 1%
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The Shanghai Composite fell 0.3%
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Euro Stoxx 50 futures up 0.2%
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Nasdaq 100 futures rose 0.1%
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Australia's S&P/ASX 200 index was little changed
Coins
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Bloomberg Dollar Spot Index little changed
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The euro fell 0.1% to $1.1118
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The Japanese yen fell 0.2 percent to 145.56 per dollar.
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The offshore yuan fell 0.1% to 7.1272 per dollar.
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The Australian dollar was little changed at $0.6744.
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The pound was virtually unchanged at $1.3023.
Cryptocurrencies
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Bitcoin remained unchanged at $59,332.34
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Ether remained unchanged at $2,591.94
Captivity
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The yield on the 10-year Treasury note was virtually unchanged at 3.80%.
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The yield on 10-year Japanese bonds fell 1.5 basis points to 0.875%.
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The yield on Australian 10-year bonds fell eight basis points to 3.87%.
Raw materials
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West Texas Intermediate crude fell 0.2% to $73.04 a barrel
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Spot gold rose 0.2% to $2,518.27 an ounce
This story was produced with assistance from Bloomberg Automation.
–With assistance from Rob Verdonck and Jeanny Yu.
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