Macro Roundup (Sep 30)

SHANGHAI, Sep 30 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar surged on Wednesday to a one-year high against major currencies, boosted by increased expectations for a reduction in the U.S. Federal Reserve’s asset purchases starting in November and an interest rate hike, possibly in late 2022.

The greenback also fared well despite an impasse in Washington over the U.S. debt ceiling that threatened to plunge the government into a shutdown.

The world’s largest reserve currency, seen as a safe-haven bet at times of market stress, has strengthened in recent days as investors instead focused on fears of a global slowdown, a rise in energy prices and higher U.S. Treasury yields.

Traders are also concerned the Fed will start to withdraw policy support just as global growth slows.

U.S. stock index futures inched higher during overnight trading on Wednesday, after tech stocks dipped again as investors digest the impact from higher rates.

Futures contracts tied to the Dow Jones Industrial Average gained 81 points, or 0.24%. S&P 500 futures advanced 0.24%, while Nasdaq 100 futures gained 0.24%.

The Dow and S&P 500 inched higher during regular trading. The 30-stock Dow advanced about 90 points for its fifth positive session in the last six, while the S&P 500 gained 0.16%, breaking a 2-day losing streak.

The Nasdaq Composite, meanwhile, declined 0.24% for its fourth straight negative session. The technology sector declined again on Wednesday and is now down 4% for the week, making it the worst-performing S&P group.

The tech decline came as the 10-year Treasury yield hit a high of 1.56% on Wednesday, after rising to 1.567% on Tuesday. The move higher is pressuring tech stocks since it makes promised future cash flows look less attractive.

Oil prices edged lower on Wednesday after U.S. crude inventories rose by more than anticipated, even as OPEC plans to maintain its deliberate approach to adding supply to the market despite strong worldwide demand.

U.S. crude stockpiles rose by 4.6 million barrels last week, exceeding expectations, boosted by a rebound in output as offshore facilities shut in by two U.S. Gulf hurricanes resumed activity.

Brent crude fell 51 cents, or 0.6%, to $78.58 per barrel, having fallen nearly $2 on Tuesday after touching $80.75, its highest in nearly three years.

US oil declined 45 cents, or 0.6%, to $74.84 per barrel, having dropped 0.2% in the previous session.

Oil prices have been charging higher as economies recover from pandemic lockdowns and fuel demand picks up, while some producing countries have seen supply disruptions.

Gold fell in choppy trading on Wednesday as the dollar rose and on growing confidence that the U.S. Federal Reserve would soon begin winding down its economic support measures.

Spot gold was down 0.7% at $1,722.50 per ounce by 1:32 p.m. EDT, after hitting its lowest since Aug. 10 at $1,720.49.

US gold futures settled 0.8% lower at $1,722.9.

The pan-European Stoxx 600 provisionally closed up 0.7%, after losing as much as 2% Tuesday. Autos added 1.6% to lead gains as most sectors and major bourses swung into positive territory.

Inflation prospects and bond yields are in focus after a turbulent start to the week.