(Bloomberg) — Asian equities were mixed and US and European share futures rose slightly in a cautious start to trading Monday as investors weighed the prospect of more rate hikes and an economic slowdown. The dollar gained.
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Stocks were higher in Japan and Australia while equities fluctuated in Hong Kong rose in Shanghai after the People’s Bank of China kept a key lending rate unchanged and made the smallest net injection of liquidity since November.
The S&P 500 futures rose 0.2%, those for Euro Stoxx 50 added about the same amount and contracts for the Nasdaq 100 were little changed. The S&P 500 climbed 0.8% last week and Nasdaq 100 squeezed out a 0.1% gain as policy-sensitive technology names like Microsoft Inc. and Apple Inc. dragged on the tech gauge. Swaps traders upped bets for a rate increase by June and pricing suggests a quarter point hike has better than three-in-four odds for May.
The dollar advanced slightly versus major peers. Treasury yields were little changed, with the rate-sensitive two-year hovering at around 4.1% Monday. It was driven higher last week by a measure of March retail sales showing core readings declined less than estimated and comments from Fed officials. Yields on government bonds in Australia and New Zealand climbed in early trading.
Looking further ahead this week, investors are awaiting the release of the Fed’s Beige Book and commentary from officials including John Williams, Raphael Bostic, Loretta Mester and Lisa Cook. Markets were rattled last week after Fed Governor Christopher Waller said he favored more policy tightening in the central bank’s battle with inflation.
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Traders have upped wagers for at least one more interest rate increase from the Federal Reserve this year as worries about the banking sector abate and inflation pressure persists in the US.
“I don’t think all of the rate hikes have worked their way through the system and it looks as though the Fed is going to continue to tighten,” Frances Stacy, director of strategy at Optimal Capital Advisors, said on Bloomberg…
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