The Nub

US equity futures rose while stocks in Asia were mixed on Tuesday amid a dip in the dollar, as sentiment continued to be tested by central banks tightening monetary policy and Europe’s energy crisis. An early advance in MSCI’s Asia gauge fizzed as gains evaporated in Japan and Hong Kong while China fluctuated. S&P 500 futures pushed higher but off the peak ahead of the resumption of Wall Street trading after a holiday. Treasuries dipped across the curve, taking the 10-year yield to 3.21%.

Why Does it Matter

The next leg in a wave of monetary tightening is due in Australia, where economists expect the central bank to lift the policy rate by a further 50 basis points. Tightening financial conditions globally have been weighing on stocks and bonds in recent weeks. Bouts of investor calm have tended to fizzle. “A lot of clients are asking, have we seen the bottom yet and are we going into a global recession?” Grace Tam, BNP Paribas Wealth Management Hong Kong chief investment adviser, said on Bloomberg Television. “We do think the risk of a global recession, especially next year, is actually quite high” and that the energy crisis “is not fully priced” into markets, she said.

What Next

An Asian equity index declined, paced by losses in Hong Kong, where tech shares slid as traders weighed the risk of curbs on investment from the US. China reduced the amount of foreign-exchange deposits banks need to set aside as reserves for the second time this year to boost the yuan after the currency hit a two-year low. The view that global shares already hit their bear-market low back in June is looking increasingly precarious. Europe’s intensifying energy crisis is the latest hit to sentiment, which was already under pressure from a wave of monetary tightening.