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Stocks mixed, dollar drops ahead of Fed decision: markets wrap

Equities traded mixed in Asia on Wednesday as investors took stock of the recent risk-asset rally and awaited clues on the next steps for monetary policy from the Federal Reserve. The dollar resumed its recent decline.
Bloomberg
By Bloomberg
10 Jun
Last day of China's National People's Congress in Beijingepa08449285 Chinese President Xi Jinping (C, 2nd row from bottom) and Premier Li Keqiang (4-R, 2nd row from bottom) applaud during the closing ceremony of the third session of the 13th National People's Congress (NPC) at the Great Hall of the People in Beijing, China, 28 May 2020. The NPC runs parallel to the annual plenary meetings of the Chinese People's Political Consultative Conference (CPPCC); they are together known as 'Lianghui' ('Two Meetings'). This year, both major political events ? which were initially scheduled to be held in March ? were postponed due to the ongoing pandemic of the COVID-19 disease caused by the SARS-CoV-2 coronavirus. EPA-EFE/ROMAN PILIPEY

Shares dipped in China and were little changed in Japan. Hong Kong fluctuated, while Australia and South Korea edged higher. S&P 500 futures rose after the index on Tuesday halted a surge that drove it into the black for 2020, with a drop of 0.8%. The Nasdaq 100 briefly topped 10,000 as Apple Inc. jumped on news it’s preparing to announce a shift to its own main processors in Mac computers. Treasuries were flat.

Option-based gauge of U.S. stock risk tumbles to lowest level in a decade

After a record-breaking rally that added over $21 trillion to global stock markets, technical indicators suggest a pullback may be overdue. Sentiment toward U.S. equities swung to extreme confidence from equally extreme fear in less than three months.

“It would be no great surprise to see a period of market consolidation now as investors await decisive news on the coronavirus front to determine the direction of the next big market moves,” said Paul O’Connor, head of multi-asset at Janus Henderson Investors.

Investors will turn their focus to the Federal Reserve Wednesday, where the central bank will probably use its meeting to shed light on various lending plans without easing further. Officials will also publish their employment and growth targets for the first time since the outbreak.

Elsewhere, oil declined ahead of inventory data on Wednesday. Gold was little changed after Tuesday’s surge.

What to watch this week:

  • The Fed’s next policy decision is Wednesday. Officials are expected to leave rates above zero.
  • OECD releases its economic outlook Wednesday, a twice-yearly analysis of the economic prospects of member countries
  • Euro-area finance ministers meet Thursday to discuss the EU’s recovery package and Eurogroup presidency succession.

These are some of the main moves in markets:

Stocks

  • Futures on the S&P 500 rose 0.5% as of 11:54 a.m. in Tokyo. The index dipped 0.8% Tuesday.
  • Japan’s Topix index declined 0.1%.
  • Hong Kong’s Hang Seng fell 0.2%.
  • The Shanghai Composite slid 0.7%.
  • South Korea’s Kospi index rose 0.2%.
  • Australia’s S&P/ASX 200 Index gained 0.2%.

Currencies

  • The yen was at 107.68 per dollar, up 0.1%.
  • The offshore yuan held at 7.0700 per dollar, up 0.1%.
  • The euro bought $1.1344.
  • The Bloomberg Dollar Spot Index fell 0.2%.

Bonds

  • The yield on 10-year Treasuries held at 0.83%.
  • Australia’s 10-year yield slipped two basis points to 1.03%.

Commodities

  • West Texas Intermediate crude dropped 1.6% to $38.34 a barrel.
  • Gold was at $1,716.18 an ounce, up 0.1%.

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