Most Asian equities and US futures fell on Monday as rising energy prices cemented concerns about inflation and slowing Chinese growth. Bond yields increased.
MSCI Inc.’s gauge of Asia Pacific stocks was on track for its first decline in four sessions, as stocks fell in Japan, Hong Kong and China, where the economy slowed in the third quarter. US contracts fell after US stocks rallied on Friday, and the S&P 500 posted its best week since July as gains boosted sentiment.
Bond yields in New Zealand and Australia rose after New Zealand inflation accelerated at the fastest pace in 10 years. Yields on Australian three-year bonds rose to 18 basis points, their highest level since January. Ten-year Treasury yields rose again to 1.6%, while the dollar rose.
Oil prices were based on their eighth weekly gain with West Texas Intermediate crude rising above $ 83 a barrel to its highest level since 2014. Brent approached $ 86 a barrel.
Investors continue to grapple with inflation concerns amid a growing power shortage that is causing further production cuts and raising bond yields. At the same time, the economic recovery remains uneven, as central banks come ever closer to reducing stimulus. US consumer confidence unexpectedly fell in early October, but retail sales advanced.
“We’re starting to see some cracks in the transitory narrative that we’ve been hearing for quite some time,” Meera Pandit, global market strategist at JP Morgan Asset Management, told Bloomberg Radio. “Rates will continue to rise from where we are. But I don’t think that from the Fed’s perspective, when you think about the short end of the curve, they will move much before 2023. They are going to be a little more patient than the market expects right now. ”
Bank of England Governor Andrew Bailey said the central bank “will have to act” to curb inflationary forces and warning that higher energy costs mean that price pressures will persist. Mohammed El-Erian, Allianz SE chief economic adviser and Bloomberg columnist, said investors should prepare for increased market volatility if the Federal Reserve withdraws stimulus measures put in place by the Covid-19 pandemic.
In China, headwinds from a housing recession to an energy crisis and moderation in consumer spending weighed on growth. People’s Bank of China Governor Yi Gang said authorities may contain the risks posed to the Chinese economy and financial system by the struggles of China’s Evergrande Group.
Elsewhere, Bitcoin rallied above $ 62,000 as the first US Bitcoin futures ETF may debut on Monday.
Events to watch this week:
- Profits accrue, including those of AT&T Inc., Barclays Plc, Johnson & Johnson, Netflix Inc., and Tesla Inc.
- Bank of Indonesia Interest Rate Decision and Information, Tuesday
- The NPC Standing Committee of China opens a meeting on Tuesday that will last until October 23. On the agenda is a review of antitrust regulations.
- US Home Start, Tuesday
- EIA Crude Oil Inventory Report, Wednesday
- China real estate prices, prime loan rates, Wednesday
- US Conference Board Leading Index, US Existing Home Sales, Unemployment Claims, Thursday
- Fed Chairman Jerome Powell takes part in a policy panel discussion on Friday
Some of the main movements in the markets:
- S&P 500 futures saw little change at 12:31 pm in Tokyo. The S&P 500 was up 0.8%
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 0.6%
- The Topix index fell 0.3%
- The S & P / ASX 200 index rose 0.2%
- The Kospi index rose 0.1%
- The Hang Seng Index fell 0.5%
- The Shanghai Composite Index fell 0.4%
- Euro Stoxx 50 futures changed little
- The Japanese yen was at 114.32 to the dollar, down 0.1%.
- The offshore yuan was at 6.4381 to the dollar.
- Bloomberg’s dollar spot index rose 0.2%
- The euro was at $ 1.1583
- The 10-year Treasury yield rose three basis points to 1.60%.
- The yield on Australia’s 10-year government debt rose by about nine basis points to 1.74%.
- West Texas Intermediate crude rose 1.6% to $ 83.56 a barrel
- Gold was at $ 1,768.15 an ounce
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