(Bloomberg) -- The dollar erased an advance and the pound swung to a gain after a report that raised the prospect of the Bank of England extending its emergency bond buying. US stock futures jumped and Asian equity markets pared losses amid a shift in risk sentiment.
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The Financial Times report indicated the BOE had briefed bankers that its bond buying program to stave off a crisis in UK pensions could persist beyond its Oct. 14 deadline. This ran counter to comments on Tuesday from the central bank’s governor urging investors to prepare for the program to stop this week.
The unwinding in market moves on Wednesday pulled back the dollar while shares in Australia and South Korea edged higher. Equities in Hong Kong remained down.
The changes failed to move the yen, which remained around levels that have previously triggered intervention as investors prepare for higher US rates while the Bank of Japan sticks with ultra-easy policy.
“I don’t see any imbalances yet that would cause a pivot from the Fed,” Citigroup Inc. economist Veronica Clark said on Bloomberg Television. “The Fed will pay attention to global financial stability concerns, a strong dollar is part of that, but it’s ultimately going to be domestic conditions and what the Fed is seeing on inflation.”
The drop in Chinese stocks came after little support was seen from aggregate financing and new yuan loans data that both beat consensus estimates by a wide margin. The outlook for China’s economy, which is struggling with Beijing’s Covid curbs and headwinds in the technology and property sectors, continues to cast a shadow over markets in Asia.
Kristina Hooper, chief global market strategist for Invesco, said in a note that while world economy is slowing after rate hikes, there is yet to be a meaningful decline in inflation. “This is an extraordinary monetary policy tightening environment and we are waiting to see if something breaks globally,” she said. “The UK has come close.”
Elsewhere, oil dropped for a third day on escalating concerns about a global slowdown, with US President Joe Biden saying a recession was possible.
Russian President Vladimir Putin threatened further missile attacks on Ukraine after hitting Kyiv and other cities in the most intense barrage of strikes since the first days of its invasion.
Key events this week:
Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
FOMC minutes for September meeting, Wednesday
US PPI, mortgage applications, Wednesday
OPEC Monthly Oil Market Report, Wednesday
Fed’s Michelle Bowman and Neel Kashkari speak
ECB’s Christine Lagarde speaks
US CPI, initial jobless claims, Thursday
G-20 finance ministers and central bankers meet, Thursday
China CPI, PPI, trade, Friday
US retail sales, business inventories, University of Michigan consumer sentiment, Friday
BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
Futures on the S&P 500 rose 0.4% as of 1:35 p.m. Tokyo time. The S&P 500 fell 0.7%
Futures on the Nasdaq 100 rose 0.5%. The Nasdaq 100 fell 1.2%
The Topix Index was little changed
The S&P ASX Index rose 0.3%
The Hang Seng Index fell 2%
The Shanghai Composite Index fell 1.2%
Euro Stoxx 50 futures fell 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $0.9714
The Japanese yen fell 0.2% to 146.20 per dollar
The offshore yuan was little changed at 7.1697 per dollar
The British pound rose 0.3% to $1.0996
Cryptocurrencies
Bitcoin rose 0.4% to $19,089.53
Ether rose 0.6% to $1,289.92
Bonds
The yield on 10-year Treasuries declined two basis points to 3.93%
Australia’s 10-year yield declined seven basis points to 3.96%
Commodities
West Texas Intermediate crude fell 0.7% to $88.76 a barrel
Spot gold rose 0.1% to $1,668.57 an ounce
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