Friday, January 21

Asian stocks fall; bond curves signal growth fears: markets close


Asian stocks fell on Thursday amid concerns that the recovery from the pandemic will slow as high inflation forces tighter monetary policy. Commodities such as iron ore and crude oil fell.

Stocks fell in Japan and China and barely changed in South Korea, where Samsung Electronics Co.’s third-quarter earnings beat estimates. US and European futures rallied after the high-tech Nasdaq 100 hit an intraday high and the S&P 500 tumbled, but remained in sight of all-time highs.

Longer-term US Treasuries remained bullish. Flatter sovereign yield curves are highlighting growth concerns as price pressures fueled by an energy crisis and supply chain tangles push central banks to adjust accommodation. Australia’s sovereign yields soared after the monetary authority chose not to defend its yield target, sparking speculation about a possible policy change.

The risks of the slowdown in China’s real estate market and the crackdown on private enterprise are also still in focus. The yen and gold both advanced and resource-linked currencies struggled in a sign of cautious investor sentiment.

Global stocks are still near their all-time highs, backed by a strong corporate earnings season so far. The risk is that sentiment will weaken if investors lose confidence in the ability of policymakers to contain inflation while fueling the economic rebound. The resistance of the Nasdaq 100 overnight and the fall of US small-cap stocks hinted at doubts about the so-called reopening of trading.

There appears to be “less confidence that the Fed will be able to thread the needle and not end up behind the curve with its tapered / ramp timeline or ahead of the curve if it reacts too quickly,” Jonathan Cohn, chief of rates trading . strategy at Credit Suisse, he wrote in a note.

Investors await the European Central Bank’s policy meeting, as well as a report later Thursday on US economic growth, which is likely to show a refreshing recovery. The Bank of Japan left its primary policy setting unchanged.

Meanwhile, the White House is increasing pressure on Democrats in Congress to finalize a framework for President Joe Biden’s tax and spending plan of up to $ 2 trillion. On the virus front, cases continue to rise in several countries. Singapore said it is investigating an “unusual increase” in infections.

In cryptocurrencies, Bitcoin fell back below $ 60,000, retreating further from the peak of nearly $ 67,000 reached last week.

Here are some events to watch this week:

  • ECB rate decision, briefing by President Christine Lagarde, Thursday
  • US GDP, Initial Unemployment Claims, Thursday
  • G20 joint finance and health ministers meet ahead of weekend leaders’ summit, Friday

Some of the main movements in the markets:

Stocks

  • S&P 500 futures rose 0.2% at 6:45 am in London. The S&P 500 fell 0.5%
  • Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 0.3%
  • Japan’s Topix Index fell 0.5%
  • South Korea’s Kospi changed little
  • Australia’s S & P / ASX 200 Index lost 0.3%
  • Hong Kong’s Hang Seng Index remained flat
  • China’s Shanghai Composite Index fell 1%
  • Euro Stoxx 50 futures rose 0.1%

Currencies

  • The Japanese yen was at 113.53 to the dollar, up 0.3%.
  • The offshore yuan was at 6.3979 per dollar, down 0.1%.
  • The Bloomberg Dollar Spot Index held steady
  • The euro was at $ 1.1605

Captivity

  • The 10-year Treasury yield increased by about one basis point to 1.55%.
  • Australia’s 10-year bond yield stood at 1.84%, three basis points higher

Raw Materials

  • West Texas Intermediate crude fell 1.3% to $ 81.56 a barrel
  • Gold was at $ 1,801.94 an ounce, up 0.3%

© 2021 Bloomberg


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