US Futures Rise Following Pelosi’s Visit to Taiwan: Markets Wrap

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Last Updated on August 3, 2022 by Bitfinsider

On Wednesday, US stock futures rose as investor apprehension over tight US-China relations subsided, while Treasuries continued to decline as a result of hawkish Federal Reserve remarks. As OPEC+ members agreed to a modest production increase, oil prices increased.

Both the S&P 500 and the Nasdaq 100 contracts increased by almost 0.6 percent. Following a bookings forecast failure, Airbnb Inc. experienced a decline in New York premarket trade. Following a bleak sales projection from Match Group Inc., the parent company of dating applications like Tinder, the stock fell. The stock of payments firm PayPal Holdings Inc. increased when it was revealed that activist investor Elliott Investment Management is now one of its largest shareholders.

In contrast to the wave of concern that swept across assets prior to her arrival, markets were calmer when US House Speaker Nancy Pelosi left Taiwan after a visit that sparked a retaliatory response from China. Little had changed in the dollar gauge.

The two-year Treasury yield increased to above 3 percent as Treasuries continued to decline after Fed policymakers said on Tuesday that the central bank still had some work to do to reduce inflation. Due to this, traders reduced their bets on policy easing in 2023.

Wednesday may have seen a reduction in the immediate concern surrounding US-China hostilities, but investors are still concerned about a variety of things, including inflation and the potential impact of central banks’ policy responses to rising prices on the world economy. Sharon Bell, a strategist at Goldman Sachs Group Inc., claims that the market’s challenges are not reflected in the way that stocks are traded.

The Stoxx 600 index for Europe barely changed as traders evaluated the most recent business earnings. BMW AG declined as the automaker warned of declining demand; nevertheless, Societe Generale SA rose after outlining new revenue targets. The Asia-Pacific equity index of MSCI Inc. decreased 0.2% in a mixed day that saw a rise in Chinese technology equities.

Fed Indicators

The tough backdrop of rising borrowing costs, pricing pressures, and slowing economic growth was also highlighted by remarks from Fed members Mary Daly, Loretta Mester, Charles Evans, and James Bullard.

President of the San Francisco Fed Daly stated that the Fed still has a “far way to go” in order to achieve price stability near its 2% inflation target. Mester, a Cleveland-area rival, stated that she needs to see “extremely convincing proof” that price rises are leveling off.

Before policymakers could “feel like we’re doing enough,” according to St. Louis Fed President Bullard, there would need to be “convincing evidence” of inflation dropping, he said in a CNBC interview on Wednesday.

In other markets, oil climbed beyond $95 a barrel after OPEC+ ministers decided to increase production by 100,000 barrels per day in September. This will provide a tight market with additional supply at a much slower rate than in prior months. Spot gold prices increased, and Bitcoin increased to above $23,000.

Your outlook on corporate bonds, mergers and acquisitions, and the strength of US business balance sheets until the end of the year are all topics covered in this week’s MLIV Pulse survey. Please go here to participate anonymously in the MLIV Pulse poll; it only takes a minute.


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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.

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