US stock index futures traded lower, suggesting the fragile risk-on tone could dissipate quite soon
Wall Street stocks surged overnight as the US 10-year Treasury yields moved back below 3%. Inflation concerns have eased somehow after Target said it will cut prices to clear out unwanted inventory in a series of steps to combat inflation. Shares of Target fell 2.44% after the retailer cut its profit outlook. The Dow Jones finished 0.8% higher, the S&P 500 gained 0.85% while the tech-heavy Nasdaq Composite added 0.84%.
Following suit, Asian equities climbed on Wednesday, shrugging off the news that the Word Bank has lowered 2022 global GDP forecast to 2.9% from the January’s estimate of 4.1%, citing risks of stagflation, developments surrounding Ukraine and China lockdowns. The Nikkei 225 in Tokyo gained 1% after the data showed that the Japanese economy contracted less than expected in the first quarter. Hong Kong’s Hang Seng advanced 2.19% while China’s Shanghai Composite was up 0.68%.
In Europe, stocks opened slightly higher, refraining from major moves as investors prepare for the ECB meeting followed by the US inflation data due later this week. The pan-European Stoxx 600 hovered around the flat-line in early deals while US stock index futures traded lower, suggesting the fragile risk-on tone could dissipate quite soon. In individual stocks, Inditex gained over 3.5% after the retailer reported an increase in both sales and profits for the first quarter.
Meanwhile, the dollar is back in the green after yesterday’s rejection from two-week highs. The USD index is flirting with the 102.60 zone during the early European hours as Treasury yields rebounded back above the 3% mark. Should risk aversion reemerge later in the day, the safe-haven US currency may see a more robust ascent, with the key near-term target arriving at 103.00.