S&P 500, Yields Steady Amid US-China Geopolitical Issues

S&P 500 Stocks - On Wednesday morning, the risk profile remains unclear after the previous day's negative sentiment. However, the market's cautious mood can be attributed to anxiety ahead of major data or events that will occur this week. Meanwhile, the S&P500 Futures, which reflects the level of risk taken by investors towards the US stock market, stopped falling after hitting a 14-month high earlier in the week. Currently, the S&P500 Futures contract tends to be inactive and is around the 4,436 level at the time of writing. On the other hand, the 10-year US Treasury bond yield fell on Tuesday by around 3.74%, but the decline has reduced by the time of writing. In general, the statement implies several geopolitical issues between the United States (US) and China that could affect the financial market. In addition, the central bank's hawkish policy and mixed economic data are also important factors that intraday traders need to pay attention to. The statement also mentioned that China is trying to boost its economic growth to avoid a recession. China’s Ministry of Finance (MoF) has announced plans to cut the purchase tax in the next few years. However, there are concerns in the market that US economic data has not been strong enough to allow bears to take over the market. The statement indicates tensions between the US and China, with the Chinese Ministry of Foreign Affairs (MoFA) stating that the US has broken its political promises to China. In addition, US President Joe Biden described Chinese President Xi Jinping as a dictator, adding to concerns about the escalating tensions between China and America. On the other hand, officials from the European Central Bank (ECB) and the Federal Reserve (Fed) have a hawkish bias, although they see mixed economic data, especially in Germany, which could affect market sentiment. On Tuesday, several Federal Reserve (Fed) candidates voiced support for an interest rate hike, while European Central Bank (ECB) officials sought to ease concerns that the region’s central bank is approaching a policy shift. It is important to note that US housing data looked overly optimistic on Tuesday, while Germany’s Producer Price Index (PPI) posted disappointing data. In this situation, the US Dollar Index (DXY) took a breather after a three-day downtrend, while gold prices gained slightly after breaking through a key support level in the previous decline. Coming up, UK inflation and speeches from several central bankers in the US, Europe, and the UK are expected to provide interesting insights for traders. However, Fed Chair Jerome Powell’s biennial testimony will be crucial to get a clearer picture of the market direction.