(Times of Update) — European futures rose 0.2%, erasing declines in Asia as investors braced for key U.S. jobs data and fresh hints of interest rate cuts from the Federal Reserve’s meeting minutes.
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Asian stocks snapped a three-day rally, led by Chinese shares in Hong Kong. Technology stocks fell on concerns about the country’s consumption outlook, Walmart Inc.’s planned sale of its stake in JD.com Inc. and weak earnings from key players including Kuaishou Technology. U.S. and European stock contracts rose.
The dollar steadied after three sessions of declines, with markets also looking ahead to Fed Chairman Jerome Powell’s speech in Jackson Hole on Friday for more clues on the size and timing of interest rate cuts. The Times of Update Dollar Spot Index rose after three days of declines, with the Thai baht hitting its highest level since July 2023 ahead of the country’s central bank decision.
“The moves seen in Asia today during the morning session are indicative of investors’ cautious anticipation of Jerome Powell’s message at Jackson Hole, as well as the revision of US employment benchmarks and August survey data that could call into question the underlying strength of the US labor market,” said Homin Lee, senior macro strategist at Banque Lombard Odier & Cie SA in Singapore. “We do not believe these two developments will ultimately be game changers for the region’s market.”
Stocks also fell in Tokyo, ignoring improved export data. Japanese stocks fell as a rising yen raised concerns about earnings. The local currency stabilized around 145 against the dollar after rebounding on Tuesday.
Elsewhere in Asia, Indonesian and Thai policymakers are expected to keep interest rates unchanged on Wednesday, citing uncertainties over political transitions and pending imminent Fed easing. Australian 10-year yields fell six basis points in morning trade.
In addition to flows and positioning, the recent rally has also been fueled by bets that the Federal Reserve will signal it is moving closer to a rate cut, leading bond traders to take on record risks as they anticipate a rally in the Treasury market.
The S&P 500 index fell below 5,600 points on Tuesday, with Nvidia Corp., which had gained nearly 25% in six days, leading the losses among mega-caps. Yields on 10-year Treasury notes were little changed after falling six basis points. Brent crude oil fell for a third straight day on concerns about a possible ceasefire in Gaza and growing concerns about the outlook for global demand, while gold hit a new record.
The European stock futures index rose 0.2%, while U.S. futures rose 0.1%.
Janney Montgomery Scott’s Dan Wantrobski says he continues to expect continued strength in the stock market in the near term, but remains on “high alert” for another potentially larger corrective wave in the August-October period.
“From a temporal perspective, we are heading towards a window where there could be strong…
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