Tuesday, January 18

US stocks, futures tumble as spirits sour; yen rises: markets end


Most Asian stocks fell on Thursday as investors weighed in on corporate earnings, high inflation and the outlook for China’s real estate sector. The Japanese yen strengthened.

Stocks fell in Japan and Hong Kong and barely changed in China. As China’s ailing Evergrande Group sank due to a growing cash shortage, other developers rebounded after regulators said real estate risks are controllable. US and European futures were in the red after a mixed Wall Street session in which the S&P 500 approached a record high and the high-tech Nasdaq 100 fell.

Long-term Treasury yields trimmed an advance. The 10-year break-even rate, an indicator of where investors see annual inflation rates over the next decade, hit the highest level since 2013. A similar measure for Japan hit a three-year high.

The dollar changed little, crude oil was stable, and Bitcoin retreated from an all-time high. Chinese coal futures tumbled amid officials’ efforts to contain energy costs.

Corporate results have tempered, but not allayed, concerns that cost pressures, fueled by an energy crisis and supply chain problems, could delay recovery from the pandemic. Investors are also grappling with the prospect of reduced central bank support and are on the lookout for tribulations in China’s real estate sector.

In recent comments from the Federal Reserve, Governor Randal Quarles said he favors an initial move to slow monetary stimulus next month and is concerned about broadening inflationary pressures that may require a policy response.

The Fed is “caught in a very difficult situation,” David Kudla, chief executive of Mainstay Capital Management, told Bloomberg Television. That is due to the possibility of reduced stimulus followed by rate hikes amid a significant slowdown in economic expansion, he said.

Meanwhile, the US Food and Drug Administration cleared the way for booster injections from Moderna Inc. and Johnson & Johnson Covid-19. Russia is among the countries that are stepping up virus restrictions to curb the rise in infections.

Events to watch this week:

  • 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 fell 0.3% at 6:57 am in London. The S&P 500 was up 0.4%
  • Nasdaq 100 contracts fell 0.4%. The Nasdaq 100 fell 0.1%
  • Japan’s Topix Index fell 1.3%
  • Australia’s S & P / ASX 200 Index was little changed
  • South Korea’s Kospi lost 0.2%
  • Hong Kong’s Hang Seng Index lost 1%
  • China’s Shanghai Composite Index changed little
  • Euro Stoxx 50 futures down 0.5%

Currencies

  • The Japanese yen rose 0.3% to 113.98 per dollar
  • The offshore yuan was at 6.3934 to the dollar.
  • The Bloomberg Dollar Spot Index was little changed
  • The euro was at $ 1.1650

Captivity

  • The 10-year Treasury yield was 1.65%.
  • The yield on Australia’s 10-year bonds stood at 1.79%, down two basis points.

Raw Materials

  • West Texas Intermediate crude was at $ 83.35 a barrel
  • Gold was at $ 1,785.08 an ounce, up 0.2%.

© 2021 Bloomberg


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