US Futures Rise on Earnings Amid Fed Countdown: Markets End

(Bloomberg) – U.S. equities and equity futures rallied on Wednesday as a series of resilient corporate earnings helped ease some of the broader caution on the markets. markets ahead of the Federal Reserve’s key monetary policy meeting.

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Contracts on the tech-heavy Nasdaq 100 added about 1.5%, while S&P 500 futures gained 1%, after reassuring reports from Alphabet Inc., Microsoft Corp. and Texas Instruments Inc. European shares also rose, with the banking sector outperforming even as Credit Suisse Group AG posted larger-than-expected losses and Deutsche Bank AG warned of costs.

The mood remains confused by the much-anticipated Fed rate hike – part of a wave of global monetary tightening to quell inflation that is stoking fears of a worldwide economic slowdown. .

Dollar and Treasury yields were little changed as traders braced for a much-announced 75 basis point Fed rate hike late Wednesday. European oil and natural gas prices continue to rise.

Credit Suisse has replaced its entangled chief executive and said it will embark on a new turnaround plan just nine months after the last one, while Deutsche Bank scrapped its efficiency target for the year and warning that the main profit target is increasingly difficult to achieve.

Meanwhile, UniCredit SpA stock jumped about 6% after posting second-quarter earnings, nearly doubling analyst expectations and raising its full-year target in anticipation of further interest rate hikes in Europe.

The Fed’s expected move to address price pressures would underpin a 150 basis point aggregate increase in June and July – the highest rate hikes since the 1980s, when President Paul Volcker when It struggled with sky-high inflation.

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The key question is whether Chairman Jerome Powell’s policy signals confirm or refute the miniaturization bets that project the highest loan-to-fund ratio around year-end and a cut in 2023 to support an economy at risk of recession.

Jason England, global bond portfolio manager at Janus Henderson Investors, said on Bloomberg Television: “The Fed hasn’t even reached neutral. “For them to start easing already or for them to start seeing easing levels priced in, I think it’s a bit early.”

IMF warning

Monetary tightening, Europe’s energy disaster amid Russia’s invasion of Ukraine and challenges from China’s real estate sector and Covid are among the risks that cloud the global outlook. The International Monetary Fund warns the world economy could soon be on the cusp of a full-blown recession.

U.S. corporate earnings are offering some hope – more than three-quarters of companies have reported to date to have either beat or met expectations. But there are doubts about how long they can weather the economic challenges.

“Inflation is hurting companies and the question is whether these policy rate hikes will do anything to ease the pain,” said Nancy Davis, founder of Quadratic Capital Management. know on Bloomberg Television.

In another development, President Joe Biden will speak with Chinese leader Xi Jinping on Thursday amid renewed tensions over Taiwan. The White House is also considering whether to lift some tariffs on Chinese imports to stem inflation.

Here are some key events to watch this week:

• Apple, Amazon, Meta earnings due this week

• Fed policy decision, press conference, Wednesday

• Australian CPI, Wednesday

• US GDP, Thursday

• European CPI, Friday

• US PCE deflation, personal income, University of Michigan consumer sentiment, Friday

Musk, Tesla and Twitter are the subject of this week’s MLIV Pulse survey. Also share your views on the S&P 500’s biggest stocks. Click here to join anonymously.

Some key moves in the market:

Inventory

• Stoxx Europe 600 up 0.5% at 8:41am London time

• Futures on S&P 500 up 1%

• Nasdaq 100 futures rose 1.5%

• Futures on the Dow Jones Industrial Average rose 0.5%

• MSCI Asia Pacific Index up 0.2%

• The MSCI Emerging Markets Index rose 0.3%.

Currency

• Bloomberg Dollar Spot Index was little changed

• The euro rose 0.2% to $1.0140

• The Japanese yen was little changed at 137.02 per dollar

• The offshore yuan was little changed at 6.7654 a dollar

• British Pound rose 0.1% to $1.2046

Bonds

• Yields on 10-year bonds were little changed at 2.81%

• German 10-year yield rose four basis points to 0.96%

• UK 10-year yield rose two basis points to 1.94%

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