Wednesday, January 19

Stocks and futures tumble as Delta raises growth concerns: markets wind down


US stocks and equity futures fell on Monday and Treasuries rose on concerns that the economic recovery from the pandemic is slowing as the fast-spreading strain of the delta virus hampers reopening.

Japanese stocks tumbled and safe-haven demand stimulated the yen amid expectations that the virus state of emergency will spread in some regions, including Tokyo. Chinese tech stocks tumbled after further criticism of online games from state media. The latest industrial production and retail sales data from China showed that activity slowed more than expected, with virus outbreaks adding new risks.

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The S&P 500, Nasdaq 100 and European equities contracts were withdrawn. A drop in US consumer confidence to a low of nearly a decade added to the cautious attitude. Treasury yields fell, the dollar firmed up, and the Australian currency fell.

Investors are also tracking the alarm in Congress as the Taliban take control of Afghanistan in the vacuum left by retreating US and NATO forces. President Joe Biden’s economic agenda is already facing roadblocks from lawmakers after some House Democrats threatened to withhold support for a $ 3.5 trillion budget plan until a bipartisan infrastructure package is enacted.

Stocks in the US and Europe hit records last week, fueled by the launch of vaccines. But the delta variant remains a threat: There is a fear that the world will have a hard time achieving herd immunity, where the pathogen stops spreading rapidly because there are enough people protected against it. Vaccines are being delayed in Asia, putting pressure on its markets, while in China expectations of easing monetary policy are rising to dampen the country’s recovery.

“Data for July suggest that the economy is losing momentum very fast,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd. “The resurgence of the delta also adds additional risk to August activities. “.

Traders will be monitoring the latest minutes from the Federal Open Market Committee this week and a speech from Federal Reserve Chairman Jerome Powell for more clues about the likely timeline for a gradual reduction of the $ 120 billion in monthly purchases of US central bank bonds

“Stocks remain vulnerable to a short-term correction, and potential triggers are the rebound in global coronavirus cases, fear of inflation, and the US phasing-out speech,” said Shane Oliver, chief executive officer. investment strategy and chief economist at AMP Capital.

Elsewhere, crude oil fell for a third day as the continued spread of the delta variant hurts the outlook for global demand, just as US drilling data points to increased activity. Bitcoin was trading around $ 47,500.

Here are some events to watch this week:

  • US Federal Reserve Chairman Jerome Powell Hosts City Hall Debate with Educators Tuesday
  • China’s highest legislative body, the Standing Committee of the National People’s Congress, begins a four-day meeting in Beijing on Tuesday.
  • US Retail Sales Expires Tuesday
  • The minutes of the Reserve Bank of Australia are scheduled to be released on Tuesday.
  • Reserve Bank of New Zealand policy decision and briefing by Governor Adrian Orr on Wednesday
  • FOMC Minutes Released Wednesday
  • Bank of Indonesia interest rate decision and Governor Perry Warjiyo briefing on Thursday

These are the main movements in the markets:

Stocks

  • S&P 500 futures were down 0.2% at 1:42 pm in Tokyo. The S&P 500 rose 0.2% on Friday
  • Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 0.3%
  • Japan’s Topix Index fell 1.7%
  • Australia’s S & P / ASX 200 Index lost 0.2%
  • Hong Kong’s Hang Seng Index lost 0.7%
  • China’s Shanghai Composite Index added 0.4%
  • Euro Stoxx 50 futures fell 0.4%

Currencies

  • The Japanese yen was trading at 109.43 to the dollar, up 0.2%.
  • The offshore yuan was at 6.4781 per dollar
  • The Bloomberg Dollar Spot Index rose 0.1%
  • The euro was at $ 1.1792

Captivity

  • The 10-year Treasury yield fell two basis points to about 1.26%.
  • The yield on Australia’s 10-year bonds fell seven basis points to 1.15%.

Raw Materials

  • West Texas Intermediate crude fell 1.1% to $ 67.66 a barrel
  • Gold was at $ 1,776.12 an ounce

© 2021 Bloomberg


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