Asian stocks and US futures were flat on Monday as traders weighed inflation risks, the outlook for China and reports of impending earnings from big tech companies. Turkey’s lira fell to a record low amid a diplomatic row.
Stocks fell in Japan and mixed in China, where the central bank pushed for a daily injection of liquidity and officials extended a property tax test. Signs that it would be at least five years before authorities impose a nationwide property tax bolstered industrial metals, including iron ore.
S&P 500 and Nasdaq 100 futures fluctuated and the yield on 10-year US Treasuries rose. Federal Reserve Chairman Jerome Powell signaled on Friday that inflation could remain higher for longer. He made it clear that the Fed will soon start cutting bond purchases, but will remain patient with rate hikes. The dollar and the yen fell.
The lira fell after Turkish President Recep Tayyip Erdogan said 10 ambassadors, including those from the United States, Germany and France, were no longer welcome. They had demanded the release of a businessman and philanthropist.
Global equities have remained resilient despite the risks of price pressures fueled by supply chain bottlenecks and higher energy costs. Treasury Secretary Janet Yellen is among those advising that the inflation situation reflects a temporary pain that will ease in the second half of 2022. Investors fear that tighter monetary policy to keep inflation under control will shake up The volatility.
The Fed is becoming more aggressive as it responds to inflationary pressures “so we can expect more rate hikes than the market is setting right now,” said Rajeev de Mello, managing director of Deep Learning Investments, in Bloomberg Television. “There is concern that a faster downsizing or a more aggressive Fed creates the risk of a slowdown.”
Traders are also monitoring an outbreak of the delta virus strain in China that is expected to get worse. The nation sought to allay concerns about the slowdown in the economy with a lengthy commentary in state media outlining how the government is managing risks and remains confident of achieving its goals for the year.
“This new Covid group probably means that retail sales will be a bit weaker towards the end of the year,” Julia Wang, global market strategist at JPMorgan Private Bank, told Bloomberg Television. “With that being said, the overall impact should be fairly brief, because we can see that the authorities in general are getting better with testing, tracing and containing these groups.”
In the US, the five largest tech companies are poised to report earnings in the coming days, heralding a test of investor confidence. On the other hand, the meeting of the European Central Bank this week will be closely followed to obtain guidance on its bond purchase program for the pandemic.
Gold advanced toward $ 1,800 an ounce and crude oil extended a rally. Saudi Arabia said the OPEC + alliance should maintain its cautious approach to managing global crude supplies given the threat to demand still posed by the pandemic. Bitcoin was trading around $ 62,000.
Here are some events to watch this week:
- Revenues: Amazon, Apple, Facebook, Microsoft, Twitter, Samsung Electronics, China Vanke, PetroChina, Ping An Insurance Group
- Australia CPI, Wednesday.
- US Wholesale Inventories, US Durable Goods, Wednesday.
- Bank of Japan monetary policy decision, briefing, Thursday.
- ECB rate decision, President Christine Lagarde briefing, Thursday.
- US GDP, initial jobless claims, Thursday.
- The G-20 joint finance and health ministers meet before the weekend’s leaders’ summit on Friday.
Some of the main movements in the markets:
- S&P 500 futures rose 0.1% at 6:22 am in London. The S&P 500 fell 0.1%
- Nasdaq 100 futures were up 0.1%. The Nasdaq 100 fell 0.9%
- Japan’s Topix Index fell 0.4%
- Australia’s S & P / ASX 200 Index rose 0.3%
- South Korea’s Kospi index rose 0.4%
- Hong Kong’s Hang Seng Index remained flat
- China’s Shanghai Composite Index rose 0.3%
- Euro Stoxx 50 futures rose 0.2%
- The Japanese yen was trading at 113.64 to the dollar, down 0.1%.
- The offshore yuan was trading at 6.3784 to the dollar.
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was at $ 1.1659
- The 10-year Treasury yield rose more than one basis point to 1.65%.
- Australia’s 10-year bond yield held steady at 1.79%
- West Texas Intermediate crude rose 0.9% to $ 84.53 a barrel
- Gold was at $ 1,798.60 an ounce, up 0.3%.
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