(Bloomberg) — U.S. and European equity futures rose Wednesday as investors evaluated indebted developer China Evergrande Group’s update on a bond interest payment and awaited the Federal Reserve policy decision.
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S&P 500 and Nasdaq 100 contracts climbed after swinging between gains and losses. China avoided a major selloff after trading resumed following a holiday during which global markets where whipsawed by fears of contagion radiating from crisis-hit Evergrande. A cash injection by the Chinese central bank shored up sentiment.
MSCI Inc.’s Asia-Pacific index declined for a third day, dragged lower by Japan. Treasuries and the U.S. dollar were little changed. The yen weakened and commodity-linked currencies such as the Australian dollar pushed higher. Iron ore halted its collapse and metals steadied. Oil advanced for a second day.
Elsewhere, Bitcoin slid below $40,000 for the first time since early August before rebounding.
The Fed’s potential timeline for tapering stimulus and any shifts in expectations for interest-rate increases will be key for investors. The Fed meeting comes after a period of market volatility stoked by Evergrande’s woes. China’s wider property-sector curbs are also feeding into concerns about a slowdown in the economic recovery from the pandemic.
“In the next few weeks and perhaps in the next couple of months, Evergrande coupled with FOMC, the delta variant and a host of other issues will continue to create great volatility and to some extent that volatility will be a buying opportunity,” said Vasu Menon, OCBC Bank Wealth Management executive director for investment strategy.
Investors are eager for clues about how Beijing plans to deal with the cash crunch at Evergrande, which has more than $300 billion of liabilities. The firm injected more uncertainty into financial markets with a vaguely worded statement on a bond interest payment that left analysts grasping for details.
In Japan, the central bank left its main monetary policy settings unchanged. Markets in South Korea and Hong Kong were closed for a holiday.
Here are key events to watch this week:
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Federal Reserve rate decision, Wednesday
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Bank of England rate decision, Thursday
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Fed Chair Jerome Powell, Fed Governor Michelle Bowman and Vice Chairman Richard Clarida discuss pandemic recovery, Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.3% as of 7:05 a.m. in London. The S&P 500 was little changed
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Nasdaq 100 futures added 0.2%. The Nasdaq 100 rose 0.1%
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Japan’s Topix index fell 1%
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Australia’s S&P/ASX 200 Index added 0.4%
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China’s Shanghai Composite Index rose 0.3%
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Euro Stoxx 50 futures added 0.6%
Currencies
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The Japanese yen was at 109.55 per dollar, down 0.3%
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The offshore yuan traded at 6.4715 per dollar, up 0.2%
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The Bloomberg Dollar Spot Index was flat
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The euro was little changed at $1.1717
Bonds
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The yield on 10-year Treasuries was at 1.33%
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Australia’s 10-year bond yield was at 1.26%, down one basis point
Commodities
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West Texas Intermediate crude was at $71.45 a barrel, up 1.4%
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Gold was at $1,779.17 an ounce, up 0.3%
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