The Nub

Bourses in Japan and Hong Kong fell while China was mixed. US futures retreated after the S&P 500 and Nasdaq 100 posted small losses. A dollar gauge pushed higher and risk-sensitive currencies such as those in Australia and New Zealand slid. Treasuries were little changed, leaving the US 10-year rate above 3%. 

Why Does it Matter

The latest data showed economic activity weakening from the US to Europe and Asia, underlining the delicate task the Fed faces in hiking interest rates to bring down high inflation without sparking a recession. An Asian stock index dipped, and the dollar climbed on Wednesday as investors assessed the likely pace of Federal Reserve monetary tightening and mounting signs of an economic slowdown.

What Next

Investors will pour over Fed chair Jerome Powell’s speech at the Jackson Hole symposium on Friday for a sense of how hawkish the US central bank will be in the face of mounting economic challenges. A global rebound in equities from a June low has stalled ahead of the much-anticipated event. In China, drought and power shortages are compounding challenges from a property crisis and Covid curbs. Elsewhere, crude oil held gains near $94 a barrel, bolstered by shrinking US crude stockpiles and possible OPEC+ output cuts.