Market Wrap: 7 March 2023

Market Wrap: 7 March 2023

US Equity Futures Edge Up; Aussie Slides on RBA:

  • Hang Seng China Enterprises Index surges, then retreats
  • Traders await Fed Chair Powell’s testimony to lawmakers

US stock futures made small gains while Asian shares fluctuated in a choppy session Tuesday as investors awaited more cues from Chinese policymakers and Federal Reserve Chair Jerome Powell. Contracts for European stocks were little changed.

Australia’s dollar and government bond yields slid after the central bank said inflation appeared to have peaked. The nation’s stocks advanced on the prospect that the bank is closer to the end of a cycle that has brought 10-straight interest-rate hikes.

Moves in other major currencies and Treasuries remained subdued within narrow ranges. The rate on 10-year US government debt remained just below the closely watched 4% level. A gauge of greenback strength was steady. 

Investors continue to weigh the impact of China’s modest growth target — which comes with the silver lining of less pressure on inflation — along with the likelihood of more interest rate hikes in economies including the US. Powell will face Congress twice this week, beginning later Tuesday.

The Hang Seng China Enterprises Index jumped as much as 2.4% before erasing its advance amid jittery trading in Hong Kong and mainland China. Data released during the mid-day break showed China’s exports and imports continued to decline in the first two months of the year, clouding the outlook for the economy as it gradually begins recovering from Covid restrictions.

Later Tuesday, the Fed’s Powell will begin two days of testimony before Senate and House committees. He’ll have the chance of telegraphing how much more policy tightening he thinks is needed, ahead of a pivotal jobs report on Friday and the next US rates decision on March 22.

The current lack of traction for US equity markets shows many investors are concluding a recent rally was probably overdone, with recession risks lingering as central banks worldwide indicate they’re unlikely to soon pivot away from strict monetary tightening. 


While the peak in commodities inflation may have already passed, and there are some encouraging signs in terms of food and other goods, there are still significant price pressures, said Henrietta Pacquement, head of the global fixed-income team at Allspring Global Investments.

“What is more persistent is what we are seeing on the services side and that may drag on a little longer,” she said on Bloomberg Television. Pacquement also cautioned that the outlook through 2023 is unclear. “There is a slim window for a no-landing of sorts but I do think you have to have the recession scenario in mind as well.”

Elsewhere in markets, oil and gold clung to small gains and a gauge of commodities was little changed.


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