Stocks were expected to rise on Wednesday as Nancy Pelosi’s visit to Taiwan ended without major repercussions.
Treasury yields also rose as investors continued to watch the Federal Reserve’s monetary policy stance.
future for them
Dow Jones industry average
have advanced 0.4% while
Futures both appeared poised to open 0.4% higher.
Overseas, the pan-European
rose 0.2% and Hong Kong’s
Hang Seng Index
“Stock futures are trading cautiously higher this morning as geopolitical fears ease following Pelosi’s departure from Taiwan,” writes Tom Essaye of The Sevens Report.
Investor sentiment had faltered a bit since House Speaker Nancy Pelosi (D., California) arrived on her historic visit to Taiwan — an island at the heart of the global chip industry that China considers part of its territory. China responded by planning drills around Taiwan that will be among the most significant in nearly 30 years.
But after falling on Tuesday, stocks were poised to recover somewhat in the coming day as Pelosi left Taiwan and China failed to take immediate military action.
“Risk assets are trying to shrug off the recent spike in US-China tensions, with … US futures appearing to have found firmer footing after a shaky start to August,” said Han Tan, an analyst at broker Exinity.
Geopolitical tensions are providing a respite from the most dominant macroeconomic forces that have been sweeping markets of late – inflation at a four-decade high and the risk of a recession as the Fed moves to fight scorching prices with much tighter monetary policy.
But these factors remained prominent as US Treasury yields soared amid renewed focus on the Fed’s rate-hike path. The central bank has hiked rates four times already this year, including outrageous 75 basis point hikes in June and July – the highest since 1994 – and is expected to continue to tame inflation.
“US 10-year yields were already up 10 basis points prior to speaker Pelosis safely landing, mainly in the hour or so before the plane landed, on comments from San Fran Fed President Daly, who said the work of the Fed’s fight against inflation is far from complete,” says Deutsche Bank strategist Jim Reid, noting the move was the fourth-biggest in five years as investors “still see a lot of volatility in markets.”
Yields on the benchmark 10-year bond jumped 2.55% to 2.7% on Tuesday, before rising back above 2.79% on Wednesday.
Investors are now looking to Friday’s Bureau of Labor Statistics jobs data to see if the job market cooled at all in July. The summary of job vacancies and work turnover released by the BLS on Tuesday showed 10.7 million jobs were listed in June, the lowest level since September 2021. It could be a sign that the red-hot job market is cooling.
“Tuesday’s JOLTS job listing data fell more-than-expected in June to a 9-month low,” Evercore ISI analyst Julian Emanuel wrote in a report Wednesday. “This mirrors other signs of a slowdown in the labor market – albeit accompanied by a series of high-profile announcements of layoffs and hiring pauses in recent weeks.”
In commodities, oil prices fell Wednesday ahead of a meeting of the OPEC+ group of national producers, which includes Saudi Arabia. The oil cartel is expected to do little to increase production orders amid concerns over slowing demand. Futures on US benchmark West Texas Intermediate Crude fell 1% to $93.50 a barrel.
“Fears of slowing demand seem to be winning the battle,” said Sophie Lund-Yates, an analyst at brokerage Hargreaves Lansdown. “Very real questions about the health of the global economy mean demand for oil and gas could contract enough to overturn supply concerns. Continued volatility is to be expected.”
Here are three stocks moving on Wednesday:
(Ticker: HOOD) was up 2% in US premarket trading, reversing earlier declines. The retail-focused trading platform announced on Tuesday that it would cut 23% of its workforce as it copes with a trading slowdown. The group released its results ahead of schedule and reported a loss of 34 cents per share for the second quarter, beating analysts’ expectations of a loss of 32 cents per share as monthly active users fell to 14 million, down 1 .9 million compared to the first quarter.
(MSTR) is up 1.3% in premarket even after the software group – which has a significant amount of Bitcoin on its balance sheet – announced that its CEO Michael Saylor, a high-profile crypto bull, would step down and take on the role of chairman of the board . The company reported a $1.1 billion loss in the second quarter caused by a bitcoin-sized hole worth about $918 million as a result of crypto price declines.
Bavarian Motor Work
(BMW.Germany) tumbled 6.2% in Frankfurt trading after the automaker lowered its full-year delivery forecast, which weighed on the stock despite a second-quarter profit and sales slump.
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