Stocks were mixed on Wednesday as traders weighed company earnings and risks from inflationary pressures. Treasury yields and the dollar were weaker.
Chinese technology stocks listed in the US rallied in premarket trading, along with Hong Kong peers such as Alibaba Group Holding Ltd. on hopes the worst of Beijing’s regulatory crackdown is over. Tesla Inc. will be in focus on the busiest day so far of this earnings season. Index futures were little changed after the S&P 500 closed near a record.
In Europe, Nestle SA and Deliveroo Plc led an increase in food and beverage companies as both forecast faster growth, while Kering SA led a decline in retailers after slowing sales at Gucci. Rio Tinto Group dropped with mining shares and base metals after China launched a blitz of measures to tackle the energy crisis. Oil fell from a seven-year high.
The earnings season has taken some of the spotlight away from concerns about stagflation — the combination of lower growth and higher inflation. Still, clouds are gathering over the economic recovery from price pressures stoked by energy costs, global supply-chain bottlenecks and reduced central bank support.
“As the corporate earnings seasons gains momentum, the stagflation pessimism that was beginning to characterize market sentiment earlier this month is now starting to recede,” Simon Ballard, chief economist at First Abu Dhabi Bank, wrote in a note. “Whether the latter is sustainable though remains to be seen.”
Global bonds were little changed as UK consumer prices accelerated well beyond the Bank of England’s target for a second month — the last data before the central bank’s decision on interest rates next month.
In the latest Fed comments, Governor Christopher Waller said the central bank should begin tapering its bond-buying program next month. He expects inflation to moderate and said interest-rate hikes are probably “still some time off.”
“I don’t think the Fed is going to act or hike very aggressively in part because they have this inflation view, but also because we are going to be in a slowing growth environment by the end of next year,” Esty Dwek, FlowBank SA chief investment officer, said on Bloomberg Television.
Bitcoin is close to hitting a record on optimism following the debut of the first Bitcoin-linked exchange-traded fund listed in the US.
Meanwhile, progress on President Joe Biden’s economic agenda appears closer, after Congressional Democrats made headway in breaking a stalemate on the multitrillion-dollar tax and spending package.
Traders continue to monitor the debt woes at China’s real-estate developers. Sinic Holdings Group Co. became the latest to default, while the wait continues for China Evergrande Group’s overdue interest payments on dollar bonds. A property slump saw China’s home prices fall for the first time in six years.
Futures on the S&P 500 were little changed as of 8:41 a.m New York time. Futures on the Nasdaq 100 rose 0.1%. Futures on the Dow Jones Industrial Average were little changed. The Stoxx Europe 600 rose 0.2%. The MSCI World index rose 0.1%.
The Bloomberg Dollar Spot Index fell 0.1%. The euro was little changed at $1.1640. The British pound fell 0.1% to $1.3779. The Japanese yen rose 0.2% to 114.16 per dollar
The yield on 10-year Treasuries declined two basis points to 1.62%. Germany’s 10-year yield declined three basis points to -0.13%. Britain’s 10-year yield declined five basis points to 1.12%. West Texas Intermediate crude fell 1.1% to $82.02 a barrel. Gold futures rose 1% to $1,788.90 an ounce.