S&P 500 Futures retreat amid geopolitical fears, sluggish yields, Fedspeak, China eyed

Market sentiment remains dicey while tracing Wall Street’s mixed close amid geopolitical fears emanating from China and Russia. Adding strength to the cautious mood are the chatters surrounding the US debt ceiling and hawkish Federal Reserve (Fed) talks.

While portraying the mood, S&P 500 Futures retreated from the highest levels since early February, marked the previous day, as it prints mild losses near 4,178 during early Wednesday. It’s worth noting that the US stock futures snap a two-day winning streak with the latest inaction.

On the other hand, the US 10-year and two-year Treasury bond coupons dropped for the first time in four days by the end of Tuesday, sluggish around 3.59% and 4.21% by the press time.

The recent chatters surrounding the US House China Committee’s discussion about the Taiwan invasion scenario and a likely drag on the US debt ceiling decision seem to exert downside pressure on the risk profile of late. On the same line could be the recently downbeat US data and hawkish Fed bets. It should be observed that mixed earnings also prod the equity buyers of late.

Recently, Netflix slumped during the aftermarket trading as earnings missed expectations.

On the other hand, the US Housing Starts and Building Permits roiled the mood with downbeat prints for March on Tuesday. That said, the Housing Starts eased to 1.42M versus 1.432M prior and 1.40M market forecasts whereas the Building Permits dropped to 1.413M from 1.55M previous readings and analysts’ estimations of 2.2M.

Furthermore, St. Louis Federal Reserve President James Bullard said on Tuesday, in an interview with Reuters, “Interest rates will need to continue to rise in the absence of clear progress on inflation.” On Monday, Richmond Fed President Thomas Barkin said that he wants to see more evidence of inflation settling back to target. Recently, Atlanta Fed President Raphael W. Bostic who recently mentioned that the economy is still gaining momentum, but inflation is too high.

Elsewhere, Bloomberg released news suggesting China’s role in the Russia-Ukraine war joins US President Joe Biden’s resistance in negotiating debt limit to also weigh on the sentiment.

Amid these plays, WTI crude oil picks up bids to print mild gains above $81.00 while the Gold price struggles around $2,005 amid the inactive US Dollar Index.

Moving on, the monthly release of the Fed’s Beige Book and the UK inflation may entertain traders while the last week of Federal Reserve (Fed) officials' comments before the blackout period, starting from this Saturday, as well as the China talks, will be key to watch for fresh impetus.

Also read: Forex Today: Dollar slides amid quiet market conditions