European and US equity futures inched lower on Wednesday, taking a breather after American shares advanced to fresh highs, as traders adjust portfolios amid bets the Federal Reserve will soon start cutting interest rates.
MSCI’s Asia Pacific Index – a gauge for regional benchmarks – erased some of its earlier gains, dragged down by Japanese stocks after US warned allies of stricter trade rules in the crackdown on China.
Hong Kong and mainland China stocks fluctuated as traders awaited more details from the Third Plenum. Optimism that the Fed will cut rates soon, alongside signs of US retail resilience, supported some risk-on sentiment, while increasing chances of a Donald Trump presidency raised concerns over geopolitical and trade risks over the past few sessions.
“We have a complex matrix of drivers,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. “Impending Fed easing ought to be good for rotation into smaller cap and tech, but equally, Trump 2.0 raises the uncertainty associated with geopolitics and trade.”
