After Microsoft (MSFT.O) forecasted good revenue growth; Google parent Alphabet (GOOGL.O) reported strong search engine ad sales; NASDAQ 100 Futures rose 1,5% and S&P500 futures were up 0,9% in Asia.
After-hours gains in Alphabet and Microsoft shares helped to dispel some of the doom brought on by Walmart’s (WMT.N) earnings warning and weak U.S. economic data.
European futures increased by 0,2%, and FTSE futures increased by 3%; Nikkei (.N225) in Japan increased by 0,4%.
Other places weren’t as good. The largest MSCI index of Asia-Pacific shares outside of Japan (.MIAPJ0000PUS) decreased by 0,7%. The second-largest chipmaker in the world, SK Hynix (000660.KS), cautioned that demand will likely slow as consumers cut spending, and as a result, shares dropped 1,9%.
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As a further reduction in Russian gas deliveries loomed, the euro found it difficult to recover from an overnight loss. Forecasts for global growth have been revised downward by the IMF, and traders anticipate a dramatic increase in interest rates from the Federal Reserve in the coming hours.
According to Khoon Goh, head of Asia research at ANZ Bank in Singapore, “They have spelled out their aim to hike rates to restrictive levels.” Naturally, they want to avoid a painful landing, but they just cannot take the chance that inflation will continue to be high.
At 18:00 (GMT), the U.S. central bank is anticipated to announce a rate increase of 75 basis points (bps). A 100 bps increase is about 15% more likely than what futures suggest. The Treasury market has already priced in the fact that numerous abrupt near-term hikes will be detrimental to longer-term growth.
On Wednesday, the benchmark 10-year Treasury yield remained unchanged at 2.8032%, falling short of the two-year yield of 3.0508%.
Consumer pricing data shocked on the downside for a change, albeit by a small margin, forcing investors to withdraw their bets on a 75 basis point rate hike in Australia next week. As a result, Australian bonds launched a relief rally.
In addition to concerns that interest rates could hurt economies, Europe is experiencing an energy crisis, and China is dealing with the COVID-19 regulations as well as new setbacks to its already troubled real estate market.
The euro experienced its worst session in a fortnight on Tuesday, falling 1% as energy costs soared, with German year-ahead prices reaching a record. Russia’s Gazprom announced it will further reduce westbound gas supplies.
In Asia, the dollar was stable at $1,0150. Japanese yen maintained steady at $136.96 per unit.
Large developer Country Garden (2007.HK) announced a discounted share sale, which caused the onshore CSI real estate index (.CSI000952) to drop by 2% and a Hong Kong index of mainland developers (.HSMPI) to drop by more than 5%.
Societe Generale analysts stated that “China’s housing market is in the midst of a depression and the recent mortgage boycott is a measure of the depth of the downturn. This boycott’s current scope is manageable, but there is a possibility of an escalation,”
With Brent crude futures at $104.58 per barrel and U.S. crude futures up 0,3% to $95.32 per barrel, oil prices remained stable.
At $1,717 per ounce, gold was stable.