Monday, January 24

Mixed Stocks, Bonds Fall As Traders Reflect On Recovery: Markets Wrap Up


Asian stocks were mixed on Wednesday as traders weighed company earnings and the risks of inflationary pressures. Treasury yields rose and the dollar fell.

A rally in Chinese tech companies like Alibaba Group Holding Ltd. bolstered Hong Kong in hopes that the worst of Beijing’s regulatory crackdown is over. Stocks fell in China, where the central bank boosted short-term liquidity, kept prime rates on loans stable and set a weaker-than-expected yuan benchmark in a sign of unease over the strength of the currency.

US and European futures were down. The S&P 500 closed near a record high as traders weighed the corporate impact of supply chain tangles and higher commodity prices. Johnson & Johnson raised an earnings forecast, Netflix Inc. subscribers soared, and Procter & Gamble Co. faced mounting costs.

The 10-year US Treasury yield topped 1.60% and Australian debt of a similar maturity slipped. Bitcoin is close to hitting a record of optimism following the debut of the first Bitcoin-linked exchange-traded fund to trade in the US Oil fell from a seven-year high.

The earnings season has shifted some of the attention away from concerns about a slower pandemic recovery, price pressures fueled by energy costs and reduced central bank support. The Cboe Volatility Index, a measure of implied stock swings for the S&P 500, has fallen to its lowest level since August.

In the latest comments from the Fed, Governor Christopher Waller said the central bank should start cutting its bond buying program next month. He expects inflation to moderate and said interest rate hikes are likely to be “still around for a while.”

“I don’t think the Fed is going to act or move up very aggressively, partly because they have this view of inflation, but also because we are going to be in a slower growth environment by the end of next year,” Esty Dwek, FlowBank SA, said the chief investment officer for Bloomberg Television.

Meanwhile, progress on President Joe Biden’s economic agenda appears closer, after Congressional Democrats made progress in breaking a stalemate on the multibillion-dollar tax and spending package.

Traders continue to monitor debt problems for China’s real estate developers. Sinic Holdings Group Co. became the latest to default as China Evergrande Group’s overdue interest payments on the dollar bonds continue to await. A housing recession sent home prices in China plummeting for the first time in six years.

Events to watch this week:

  • Profits accumulate, including those of AT&T Inc., Barclays Plc and Tesla Inc.
  • 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:

Stocks

  • S&P 500 futures were down 0.1% at 7:01 am in London. The S&P 500 rose 0.7%
  • Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 0.7%
  • Japan’s Topix Index changed little
  • Australia’s S & P / ASX 200 Index added 0.5%
  • South Korea’s Kospi Index fell 0.5%
  • Hong Kong’s Hang Seng Index gained 1.3%
  • China’s Shanghai Composite Index lost 0.2%
  • Euro Stoxx 50 futures fell 0.2%

Currencies

  • The Japanese yen was at 114.51 to the dollar, down 0.1%.
  • The offshore yuan was at 6.3810 to the dollar, down 0.1%.
  • The Bloomberg Dollar Spot Index fell 0.1%
  • The euro is trading at $ 1.1646.

Captivity

  • The yield on the 10-year Treasury bonds was 1.64%.
  • The yield on Australia’s 10-year bonds rose about eight basis points to 1.81%.

Raw Materials

  • West Texas Intermediate crude was at $ 82.76 a barrel, down 0.2%.
  • Gold was at $ 1,776.87 an ounce, 0.4% higher

© 2021 Bloomberg


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