U.S. stock futures gained and bond yields rose ahead of an expected interest-rate increase from the Federal Reserve, and technology stocks led a blistering rebound in Chinese markets after supportive comments from Beijing policy makers.
Futures for the S&P 500 rose 1.28% Wednesday, indicating that U.S. stocks will build on Tuesday’s gains. Contracts for the tech-focused Nasdaq-100 advanced 1.85% and futures for the Dow Jones Industrial Average added 1.13%.
VIX and VIXmain fell 4.29% and 4.95% separately.
Gold-main 2204 fell 0.46% to $1920.8.
Fed Chairman Jerome Powell has said he would propose a quarter-percentage-point rate increase—what would be the first rise since 2018—at the central bank’s meeting Wednesday as officials look to cool demand and control inflation. The central bank is navigating an unusually complicated environment of a tight labor market, supply disruptions, spiraling inflation, Russia’s invasion of Ukraine and Covid-19 lockdowns in China—the latter two of which are likely to compound inflationary and supply-chain issues.
Chinese officials said they would “coordinate pandemic prevention and control and economic development, keep the economy operating within a reasonable range and keep the capital market running smoothly,” according to a report on Wednesday by Xinhua, China’s state news agency. This helped soothe some fears over an economic slowdown in China that would also sap growth globally.
Hong Kong’s Hang Seng Index soared 9.1%, led by gains in technology stocks. The Hang Seng Tech Index jumped more than 20%, clawing back most of its losses from the past three sessions. China’s Shanghai Composite climbed 3.5%.
“The bounceback in Chinese equities shows you how sensitive the markets are,” said Peter Garnry, head of equity strategy at Saxo Bank, noting wide swings in markets in recent weeks as investors watch headlines on a number of events.
“We are in a maximum uncertainty environment. Everything can change on a dime in 24 hours with the current situation,” he added.
Nickel prices dropped 5%, the new daily limit set by the London Metal Exchange, when it reopened Wednesday. Trading was suspended last week following an unprecedented price surge that saw the metal top $100,000 a ton.
Oil prices gained as investors weighed whether lockdowns in some Chinese cities will sap demand for energy even as Russia’s invasion of Ukraine has bolstered concerns of supply disruptions. Brent-crude futures, the international benchmark, added 2.4% to $102.32 a barrel. Elevated oil prices have prompted concerns that the U.S. and Europe could see sustained inflation and lower economic growth, as higher gas and energy prices eat away at household spending on other goods and services.
The clouded global picture has injected fresh uncertainty into how aggressively central banks will tighten policy this year. Investors will be looking for clues to this question when the Fed releases its monetary policy statement at 2 p.m. ET. The U.K.’s Bank of England meets Thursday.
Bond yields rose ahead of the Fed meeting. The yield on the benchmark 10-year Treasury note ticked up to 2.171% from 2.160% Tuesday. Yields and prices move inversely. Germany’s benchmark 10-year bund yield rose to 0.389% Wednesday, up from 0.326% Tuesday and having had a negative yield earlier this month. The sharp climb in bond yields reflects investors’ growing bets that Russia’s invasion of Ukraine won’t slow the momentum toward higher interest rates.
U.S. retail-sales data for February, due at 8:30 a.m., are expected to show the second consecutive month of increased spending as households adapt to the crosscurrents of a strong labor market, falling coronavirus cases and inflation running at the highest annual rate in 40 years.
Overseas, the pan-continental Stoxx Europe 600 climbed 2.2%, led by a jump in its technology sector. Russia’s stock market remains closed through the rest of the week.