Stocks post small moves before Powell testimony: Markets Wrap

(Bloomberg) — Stocks and Treasuries posted small moves on Wednesday as traders took a cautious stance before testimony from Federal Reserve Chair Jerome Powell that’s expected to see him reiterate a lack of urgency for rate cuts.

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Europe’s Stoxx 600 fell less than 0.1%, while contracts on the S&P 500 and Nasdaq 100 edged higher. Treasury 10-year yields steadied after falling six basis points to 4.15% in the previous session. A gauge of the dollar was little changed.

Powell heads to Capitol Hill for his semiannual testimony before Congress on Wednesday amid signs the US stock rally is stalling on concern about sky-high valuations. In UK markets, traders are focused on the government’s budget announcement as well as the details of its bond issuance plan.

Meanwhile, prices for gold and Bitcoin sent mixed messages about the appetite for risk across global markets. The cryptocurrency was on the rise again after briefly hitting a record Tuesday for the first time in more than two years.

Gold was little changed after also surging to a record high in the previous session, as expectations for US rate cuts and geopolitical tensions pushed it higher.

In Asia, Hong Kong shares rebounded Wednesday, driven by Chinese tech giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd., while JD.com Inc. surged ahead of its fourth-quarter results. Mainland China stocks fell after fluctuating throughout the day.

In China, a press conference with senior officials on Wednesday may provide more details around the government’s effort to boost consumption. Central bank Governor Pan Gongsheng will brief journalists, alongside Commerce and Finance ministry chiefs and the new top securities regulator.

Elsewhere, Japan’s biggest bank expects the central bank to exit negative interest rate in two weeks and is positioning itself accordingly. Mitsubishi UFJ Financial Group Inc.’s view is much more definitive than the swap market, which rates the chances of Bank of Japan Governor Kazuo Ueda changing policy this month at about 50%.

Egypt’s pound plunged after the central bank hiked interest rates at an unscheduled meeting and said it will allow the market to determine the exchange rate. The country is looking to ease a dire shortage of hard currency and get a new multi-billion-dollar loan from the International Monetary Fund.

In commodities, oil steadied after a decline as a report showed US inventories are continuing to expand, a sign supply may be running ahead of demand.

Key Events This Week:

• Canada rate decision, Wednesday

• Eurozone retail sales, Wednesday

• US ADP employment, JOLTS job openings, Wednesday

• Fed Chair Jerome Powell testifies before the House Financial Services Committee, Wednesday

• Fed issues Beige Book, Wednesday

• Fed’s Neel Kashkari (Minneapolis) and Mary Daly (San Francisco) speak, Wednesday

• China trade, forex reserves, Thursday

• European Central Bank’s rate decision, Thursday

• US initial jobless claims, trade, Thursday

• President Joe Biden delivers the State of the Union address, Thursday

• Fed Chair Jerome Powell testifies before the Senate Banking Committee, Thursday

• Cleveland Fed President Loretta Mester speaks, Thursday

• Eurozone GDP, Friday

• US nonfarm payrolls, unemployment, Friday

• New York Fed President John Williams speaks, Friday

• ECB Governing Council member Robert Holzmann speaks, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.1% as of 8:25 a.m. London time

• S&P 500 futures rose 0.2%

• Nasdaq 100 futures rose 0.5%

• Futures on the Dow Jones Industrial Average rose 0.1%

• The MSCI Asia Pacific Index rose 0.5%

• The MSCI Emerging Markets Index rose 0.5%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.1% to $1.0868

• The Japanese yen rose 0.3% to 149.60 per dollar

• The offshore yuan was little changed at 7.2145 per dollar

• The British pound rose 0.1% to $1.2719

Cryptocurrencies

• Bitcoin rose 6.2% to $67,275.51

• Ether rose 9.1% to $3,845.2

Bonds

• The yield on 10-year Treasuries was little changed at 4.15%

• Germany’s 10-year yield advanced two basis points to 2.34%

• Britain’s 10-year yield advanced three basis points to 4.04%

Commodities

This story was produced with the assistance of Bloomberg Automation.

—With assistance from John Cheng, Richard Henderson and Jan-Patrick Barnert.

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