A look at the day ahead in markets from Anshuman Daga
Markets are dealing with dual flashpoints today on inflation and cross-straits tensions.
Fed speakers have put paid to market thinking they will lighten their inflation war while, across in East Asia, China has its warheads trained on Taiwan as Nancy Pelosi hails Taiwan's free society.
China furiously condemned the trip by the speaker of the U.S. House of Representatives, which marked the highest-level U.S. visit to Taiwan in 25 years.
Geopolitical tensions are simmering as China embarks on an unprecedented six days of military drills surrounding Taiwan. Risks of escalation are mounting, warn security analysts.
For Fed watchers, concerns of faster U.S. rate rises are back on the radar after St. Louis Federal Reserve President James Bullard said rates will need to be 'higher for longer' if inflation does not recede.
That came after a trio of Fed officials from across the policy spectrum signalled that they remain resolute on the need to make policy more restrictive.
Traders now see a chance of about 44% that the Fed will hike by another 75 basis points at its next meeting in September. Heightened rate expectations punctured a two-week rally in U.S. equity markets.
On the data front, a slew of services and composite PMIs of developed economies such as Germany, Eurozone, U.K. and the U.S. for July will be released across today.
In the U.S., durable goods orders are expected to grow 1.9% m/m in Jun from 0.8% in the prior month while factory orders likely slowed to 1.2% m/m in Jun from 1.6%.
Asian stocks are stuck in a narrow range on Wednesday, with Japan recovering from two-week lows while Korean and Hong Kong shares edged up.
Key developments that should provide more direction to markets on Wednesday:
Major earnings: Societe Generale (OTC:SCGLY), Infineon (OTC:IFNNY) Technologies, Commerzbank (ETR:CBKG), Yum! Brands (NYSE:YUM) and eBay (NASDAQ:EBAY)
Key Asian data: July releases of the S&P Global (NYSE:SPGI) PMIs for Hong Kong, Singapore and India and thee Caixin China Services PMI