(Bloomberg) -- US equity futures made up ground lost on Wednesday while Asian equities were mixed as investors parse conflicting economic signals that included a drop in oil production that could make the job of curtailing inflation even harder.
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Equities fell in Australia and futures contracts for Hong Kong dropped, echoing a decline in European and US stocks. Early futures trading on Thursday reversed the small loss for US stocks, however, while Japanese equity futures inched higher. The dollar largely held gains from Wednesday, its biggest jump in a week. The pound steadied a decline even as Fitch Ratings downgraded its UK outlook to negative.
The caution followed a decision by OPEC+ on Wednesday to reduce daily oil production by two million barrels, sending the US oil benchmark to a three-week high. The White House warned about negative effects on a global economy weathering curbs on Russian imports and said the US would release 10 million barrels from strategic reserves.
Upward pressure on energy prices threatens to prolong above-target inflation, dashing hopes that central banks may soon relent from aggressive interest rate increases. Investors will remain keenly focused on US jobs data on Friday for further clarity.
"An adjustment higher in oil prices could have an impact on the inflation numbers," said Rubeela Farooqi, chief US economist for High Frequency Economics, undoing a gentle decline over the past two months. "Inflation measures could reverse in October, if prices continue to rise."
Federal Reserve Bank of Atlanta President Raphael Bostic said on Wednesday he favored raising interest rates to 4.5% by the end of the year, implying a further 125 basis points of tightening. His San Francisco counterpart Mary Daly warned against expecting any rate cuts in 2023.
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"Inflation fears may get assuaged but then they turn into growth fears and that turns into a problem for corporate earnings," said Emily Roland, co-chief investment strategist for John Hancock Investment Management, in an interview with Bloomberg TV. "Even if rates do fall it's probably too early to call the all-clear on stocks."
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Key events this week:
Eurozone retail sales, Thursday
US initial jobless claims, Thursday
Fed's Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
US unemployment, wholesale inventories, nonfarm payrolls, Friday
BOE Deputy Governor Dave Ramsden speaks at event, Friday
Fed's John Williams speaks at event, Friday
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Some of the main moves in markets:
S&P 500 futures added 0.2% of 8.34 a.m. in Tokyo. The S&P 500 fell 0.2%
Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 0.1%
Nikkei 225 futures traded 0.2% higher
Australia's S&P/ASX 200 Index futures fell 0.4%
Hang Seng Index futures dropped 0.2%
The Bloomberg Dollar Spot Index traded flat
The euro strengthened 0.2% to $0.9901
The British pound gained 0.1% to $1.1343
The Japanese yen inched 0.1% higher to 144.46 per dollar
Bitcoin gained 0.81% to $20,147.22
Ether added 0.5% to $1,352.24
The yield on 10-year Treasuries advanced 12 basis points to 3.75%
Australia's 10-year yield gained 14 basis points to 3.77%
West Texas Intermediate crude rose 0.4% to $88.10 a barrel
Gold futures traded at $1,718.88 an ounce
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