U.S. and European futures edged lower. The S&P 500 closed near a record as traders weighed the corporate impact of supply-chain snarls and higher commodity prices while the 10-year U.S. Treasury yield was above 1.60%. The S&P 500 SPX rose to 4,519.63, within 0.4% of its Sept. 2 all-time high. The Dow Jones Industrial Average DJIA, gained 198.70 points to close 34,457.31 while the Nasdaq Composite COMP rose 107.28 points to close 15,129.09.
Asian stocks were mixed Wednesday as traders weighed company earnings and risks from inflationary pressures. A rally in Chinese technology firms such as Alibaba Group Holding Ltd. bolstered Hong Kong on hopes the worst of Beijing’s regulatory crackdown is over. Equities slipped in China, where the central bank boosted short-term liquidity, held loan prime rates steady and set a weaker-than-expected yuan reference rate in a sign of discomfort over currency strength. The Shanghai Composite Index SHCOMP lost 0.2% to end at 3,588 the Nikkei 225 NIK in Tokyo gained 0.1% to close at 29,255 while The Hang Seng HSI, in Hong Kong added 1.3% to close the day at 26,134.
U.K. consumer prices accelerated well beyond the Bank of England’s target for a second month, propelled by the global disruption in supply chains that pushed up transport costs. Consumer prices rose 3.1% in September after a 3.2% gain the month before, the Office for National Statistics said Wednesday. The Bank of England expects prices to climb above 4% by the end of the year, more than double the mandate. The data was the last before the central bank’s decision on interest rates next month, when financial markets anticipate officials will lift borrowing costs for the first time since the pandemic struck. BOE Governor Andrew Bailey has said policy makers must act to contain an upward spiral in prices.
Oil nears $85 a Barrel, with risk now skewed to the upside rising demand and constrained supply are combining to create a tighter oil market for the rest of this year after Brent hit a three-year high. There is the likelihood that gas-to-oil switching by consumers amid the gas-price surge, better refining margins and more air travel may sustain prices above $80 a barrel, barring OPEC+ intervention.
Ghana’s credit-risk premium has soared to the highest since the start of the pandemic ahead of next month’s budget and may widen further if Finance Minister Ken Oforri-Atta fails to convince investors that West Africa’s second-biggest economy has a handle on servicing its sky-high debt, a task made even more difficult by sluggish economic growth. That raises questions about debt sustainability, according to Ernest Addison, governor of the Bank of Ghana. The premium investors demand to hold the country’s debt rather than U.S. Treasuries has climbed 144 basis points in October to 910 basis points on Tuesday, the highest since May 2020. The emerging-market average sovereign spread has narrowed two basis points in the same period to 355. Ghana’s revenue fell short of target by 12% to 34.3 billion cedis ($5.66 billion) in the first seven months of the year and may continue to do so, pressuring its economic growth outlook. Economists from Redd Intelligence, Renaissance Capital and Capital Economics are already forecasting annual expansion to stay well below the target of 5% in 2021. For the record, a slower than-anticipated growth will make it harder for Ghana to fund its budget deficit, which is expected to return within the legislated threshold of 5% of GDP by 2024, after breaching it last year. The widening credit spreads also raise questions about the country’s debt trajectory.