U.S. Futures Rise With Stocks as Traders Await Fed: Markets Wrap

(Bloomberg) — Stocks in Europe rose for a second day along with U.S. index futures as investors await Wednesday’s Federal Reserve policy decision while keeping a wary eye on developments around China Evergrande Group’s debt woes.

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Basic resources and energy were among the leading gainers in the Stoxx Europe 600 index as commodity prices steadied after Beijing moved to contain fears of a spiraling debt crisis at Evergrande that could ravage demand from the property sector. Gambling operator Flutter Entertainment Plc climbed more than 5% after settling a legal dispute.

S&P 500 and Nasdaq 100 contracts advanced. China avoided a major selloff after trading resumed following a holiday, after the country’s central bank boosted its gross injection of short-term cash into the financial system.

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 back above $42,000.

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.

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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:

• Federal Reserve rate decision, Wednesday

• Bank of England rate decision, Thursday

• 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

• The Stoxx Europe 600 rose 0.8% as of 8:20 a.m. London time

• Futures on the S&P 500 rose 0.6%

• Futures on the Nasdaq 100 rose 0.4%

• Futures on the Dow Jones Industrial Average rose 0.6%

• The MSCI Asia Pacific Index fell 0.6%

• The MSCI Emerging Markets Index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1732

• The Japanese yen fell 0.3% to 109.51 per dollar

• The offshore yuan rose 0.2% to 6.4673 per dollar

• The British pound was unchanged at $1.3659

Bonds

• The yield on 10-year Treasuries advanced one basis point to 1.33%

• Germany’s 10-year yield advanced one basis point to -0.31%

• Britain’s 10-year yield was little changed at 0.81%

Commodities

• Brent crude rose 1.6% to $75.54 a barrel

• Spot gold rose 0.2% to $1,778.72 an ounce

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