U.S. futures fell further on Tuesday morning as growing concerns about the Federal Reserve keeping borrowing costs higher for longer outweighed optimism regarding China’s economic recovery.
Contracts on the S&P 500 fell by 0.3%, as did those on the Dow Jones Industrial Average. Nasdaq 100 futures slipped by 0.2%. European stocks fared marginally better, with the Stoxx Europe 600 Index edging slightly higher.
The Federal Reserve’s hawkish comments regarding their intention to maintain a tight monetary policy drove treasury futures lower as well, while the dollar edged lower, thereby falling from its three-week rally.
“2023 will be much bumpier than the current performance would suggest,” Luca Fina, head of equities at Generali Insurance Asset Management noted. “It would make sense to reduce the cyclicality of portfolios — adding some cheap year-to-date losers that should perform better in a higher-volatility and uncertainty scenario (and) by reducing those who are currently more expensive and pricing a Goldilocks scenario.”
Asian stocks, in contrast, rose on the back of China’s economic rebound. The Shanghai Composite Index climbed the most since November, while the MSCI Asia Pacific Index was up 0.7%. The offshore yuan also strengthened against the dollar by 0.2%, now sitting at 6.8594 per dollar.
