MSCI’s Asia-Pacific share index shed less than 0.5%. Moves across Japan, China and Hong Kong were fairly muted. S&P 500, Nasdaq 100 and European futures slipped after Wall Street shares posted a small gain on Thursday.
A greenback gauge hovered around a one-month high. Indonesian President Joko Widodo said China’s Xi Jinping and Russia’s Vladimir Putin plan to be at a Group of 20 summit in Bali later this year. That sets up a showdown with US President Joe Biden and other leaders as Russia continues its war in Ukraine.
Treasury yields drifted higher. Oil, gold and Bitcoin dropped. Later on Friday, a $2-trillion options expiration could stir volatility in global markets.
The latest comments from Fed officials diverged a little: St Louis’s James Bullard urged another 75 basis-point increase while Kansas City’s Esther George struck a more cautious tone, saying the case for hikes is strong but the pace is up for debate.
Investor sentiment has been boosted by expectations of slower monetary tightening on signs that high inflation is cooling. But hurdles remain for the 12% jump in world equities from June lows, not least the risk of entrenched global price pressures alongside economic slowdowns in the US and China.
While “lower volatility both in fixed income and in equities is starting to pull people back into the market,” events such as the Fed’s annual symposium in Jackson Hole, Wyoming next week will help determine if that’s sustainable, Nicholas Colas, co-founder at DataTrek Research, said on Bloomberg Television.
Traders will pour over Fed Chair Jerome Powell’s comments at the symposium. There is already speculation he may lean against a recent loosening in financial conditions that makes it harder to curb the cost of living.
Before that, Chinese banks will likely trim their benchmark loan prime rates on Monday to help shore up the nation’s economy, where a power crunch is adding to drags from a property crisis and Covid-linked curbs.
Elsewhere, Indonesia’s president said the nation could impose a tax on nickel exports this year.
Inflation remains the most closely-watched indicator in the second half. BM