Stocks Set for Steady Open Before China GDP Data: Markets Wrap

(Bloomberg) — U.S. equity futures and Treasuries fell on Monday as investors weighed the prospect of faster policy tightening by the Federal Reserve.

U.S. index futures followed a decline in Asia-Pacific stocks, which were sapped by Japan and China. Markets in Australia, Hong Kong and much of Europe remain shut for Easter.

Treasury yields rose as investors look forward to speeches by Fed policy makers this week for new clues on whether it will raise interest rates by a half point in May to curb price pressures. Investors will also focus on earnings and guidance as companies from Bank of America Corp. to The Bank of New York Mellon Corporation report on Monday.

A jump in energy costs highlighted inflation concerns, as U.S. natural gas prices surged to the highest intraday level in more than 13 years. Oil fluctuated.

A cautious overall investor mood bolstered the dollar and gold. 

Twitter Inc. rose in premarket trading after Elon Musk said the economic interests of the board are not aligned with shareholders. DiDi Global Inc. plummeted after saying it will hold an extraordinary general meeting to vote on delisting its shares from the New York Stock Exchange.

The pattern across markets suggests investors remain uncertain whether high inflation has peaked or not. Price pressures are being fanned by supply-chain snarls from China’s Covid restrictions and disruptions to commodity flows due to the war. Concern is growing that the U.S. economy faces a downturn as the Fed pivots toward aggressive policy tightening to contain the cost of living.

“Major regime change is rarely smooth in either geopolitics or economics, and markets are under-pricing these risks,” Eric Robertsen, chief strategist at Standard Chartered Bank Plc, wrote in a note. “We are increasingly concerned about a summer of turbulence and volatility.”

History suggests the Fed will face a difficult task in tightening policy to cool inflation without causing a U.S. recession, according to Goldman Sachs Group Inc. It put the odds of a contraction at about 35% over the next two years. 

The yen fluctuated after Bank of Japan Governor Haruhiko Kuroda described its retreat as very rapid.

In China, economic data were mixed — while first-quarter gross domestic product growth accelerated, retail sales shrank in March for the first time since 2020. The latter hinted at ongoing damage from recent Covid lockdowns. 

China cut the reserve requirement ratio on Friday but refrained from lowering interest rates in a cautious approach to policy easing that may sap sentiment. 

In Shanghai, officials reported the first deaths from a surging Covid-19 outbreak. The city has also published plans to resume production after a prolonged lockdown, recommending businesses adopt so-called closed-loop management, where workers live on-site and are tested regularly.

What to watch this week:

Earnings include American Express, Bank of America, Bank of New York Mellon, China Telecom, IBM, Johnson & Johnson, Netflix, TeslaEaster Monday market closures in the U.K., much of EuropeIMF/World Bank spring meetings start, MondaySt. Louis Fed President James Bullard to speak, MondayChicago Fed President Charles Evans to speak, TuesdayEIA crude oil inventory report, WednesdayChina loan prime rates, WednesdayFederal Reserve Beige Book, WednesdayFrench presidential election debate, WednesdaySan Francisco Fed President Mary Daly, Chicago Fed President Charles Evans, due to speak, WednesdayEuro zone CPI, U.S. initial jobless claims, ThursdayFed Chair Jerome Powell, ECB President Christine Lagarde discuss global economy at IMF event, ThursdayManufacturing PMIs: Euro zone, France, Germany, U.K, FridayBank of England’s Andrew Bailey to speak, Friday

Some of the main moves in markets:

Stocks

Futures on the S&P 500 fell 0.5% as of 6:10 a.m. New York timeFutures on the Nasdaq 100 fell 0.6%Futures on the Dow Jones Industrial Average fell 0.3%The MSCI World index was little changed

Currencies

The Bloomberg Dollar Spot Index rose 0.3%The euro fell 0.1% to $1.0795The British pound fell 0.3% to $1.3015The Japanese yen fell 0.1% to 126.62 per dollar

Bonds

The yield on 10-year Treasuries advanced two basis points to 2.85%

Commodities

West Texas Intermediate crude fell 0.3% to $106.68 a barrelGold futures rose 1.1% to $1,996.90 an ounce

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