(Bloomberg) — U.S. and European benchmark futures fell alongside Asian stocks on Wednesday as growth in China’s services sector slowed and equity sentiment waned.
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Policy-sensitive 2-year yields fell about 2 basis points to 4.92% while indicators of a stronger dollar edged higher after U.S. bond trading resumed after the Fourth of July holiday. rice field.
Caixin’s China Services Purchasing Managers Index is weaker than expected, highlighting concerns about a slow recovery in the world’s second-largest economy, deepening initial declines in Chinese stocks and boosting the offshore yuan. reversed.
It is also worth noting that the yuan’s depreciation has fallen even though the People’s Bank of China (PBOC) has so far maintained its support for the yuan in its daily decisions.
“This puts a renewed focus on slowing growth momentum and recent heightened geopolitical uncertainty,” said Chal Chanana, market strategist at Saxo Capital Markets, of China’s services data.
Less optimism about China’s outlook is also driving investors to lower their expectations for Asian stocks this year. A Bloomberg News survey of 17 strategists and fund managers showed that the MSCI Asia-Pacific index could rise only about 5% from Tuesday’s closing level by the end of the year.
Stocks in Japan, South Korea and Australia also fell, while the Asia-wide index fell more than 0.5% on Wednesday. S&P 500 futures were down 0.1% and Euro Stoxx 50 futures were down 0.3%.
Traders will be watching the euro zone’s service purchasing managers’ index data on Wednesday and later on the minutes of the latest Federal Reserve policy meeting that embarrassed Wall Street.
The yen traded higher against the dollar in the 145 yen range after a depreciation that sparked concerns among policy makers in Tokyo. Sensitive to China’s outlook, the Australian dollar fell after the release of the PMI data.
Elsewhere, oil prices fell after gaining on Tuesday after Saudi Arabia and Russia cut output. Traders are awaiting potentially critical comments from the Saudi energy minister. Gold remained largely unchanged.
After a sharp rally in U.S. equities in the first half of this year, investors now worry that higher interest rates and weaker economic conditions will limit future gains. In a cautionary note, strategists at Goldman Sachs Group Inc. said it was too early to ignore the risk that rising interest rates could weigh on stocks.
Not everyone is equally dark.
“As we approach an economic slowdown, we want to go for a more conservative, high-quality tilt,” Tai Hui, chief Asia-Pacific market strategist at JPMorgan Asset Management, told Bloomberg TV. “But once the economy picks up and all the bad news is washed away, I think that’s where stocks really shine.”
Looking further ahead, Friday’s US nonfarm payrolls report will be an important event for markets that gives further hints about the trajectory of monetary policy.
This week’s main events:
Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday
OPEC International Seminar, Speakers Including OPEC+ Oil Ministers Open Wednesday in Vienna
FOMC to publish minutes of June policy meeting on Wednesday
New York Fed President John Williams gives a “fireside chat” at the Central Banking Research Association meeting Wednesday at the New York Fed.
U.S. Initial Jobless Claims, Trade, ISM Services, Jobs, Thursday
Dallas Fed President Laurie Logan to Address Panel on Central Bank Policy Challenges at CEBRA Meeting on Thursday
US unemployment, nonfarm payrolls, Friday
ECB’s Christine Lagarde to speak at event in France on Friday
The major movements in today’s market are:
As of 7:09 am London time, S&P 500 futures were down 0.1%.
Nasdaq 100 futures down 0.2%
Japan’s TOPIX fell slightly
Australian S&P/ASX 200 down 0.3%
Hong Kong’s Hang Seng fell 1.6%.
The Shanghai Composite fell 0.6%.
Euro Stoxx50 Futures Down 0.3%
Bloomberg Dollar Spot Index Little Change
The euro remained unchanged at $1.0879.
The Japanese yen fell 0.1% to 144.63 yen to the dollar.
The offshore yuan fell 0.3 percent to 7.2467 to the dollar.
The Australian dollar fell 0.1% to $0.6684.
The British pound was little changed at $1.2702.
Bitcoin almost unchanged at $30,805.7
Ether fell 0.4% to $1,934.81.
This article was produced in partnership with Bloomberg Automation.
–With help from John Cheng.
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