Wednesday, January 26

Asian Stocks Down, US Futures Down; yen up: markets wrap up


Most Asian stocks fell on Tuesday as traders took in the latest coronavirus restrictions in China and awaited key decisions from the central bank amid concerns about high inflation. The yen strengthened.

Stocks fell in China, where Beijing authorities suspended classes at 18 schools in one district after a teacher became infected with Covid-19. Samsung Electronics Co. strengthened shares in South Korea. Futures in the United States and Europe fell after an overnight record on Wall Street.

In Australia, the central bank removed its bond yield target. The nation’s currency fell after Gov. Philip Lowe said it is still “likely to take some time” for inflation to sustainably return to target. Yields on three- and ten-year debt declined.

The yield on 10-year US Treasuries and the dollar changed shortly before the Federal Reserve meeting. The policy review comes amid price pressures fueled by the most widespread US supply contraction since the 1973 oil crisis. The Fed is expected to announce a reduction in its bond buying program.

The earnings season has propped up the stock market, offsetting concerns about inflation and tighter monetary policy. But the supply chain challenges of the pandemic era, along with higher energy costs, could become a bigger test if fueled by broader and longer-lasting price pressures.

“We expect volatility in financial markets to remain high as not only the Fed, but other central banks around the world, draw liquidity to combat rising inflation,” wrote Lon Erickson, portfolio manager at Thornburg Investment. Management, on a note. Despite the Fed’s rhetoric, “we have started to see the market price in previous policy rate movements, perhaps losing confidence in the ‘transitory’ nature of inflation.”

Bank of England policymakers approach their November 4 meeting knowing that failure to achieve a previously unthinkable interest rate hike would raise questions about their credibility in the markets.

In the US, more than 80% of S&P 500 companies that reported third-quarter results have beaten Wall Street estimates. At the same time, the data showed that supply chain bottlenecks weighed on the country’s manufacturers in October.

President Joe Biden’s $ 1.75 trillion tax and spending package appeared to face a new challenge, after Senator Joe Manchin said Congress needs more time to assess its impact.

Elsewhere, iron ore futures increased losses below $ 100 a ton on expectations of lower steel production in China. Oil was trading around $ 84 a barrel. Bitcoin rose to $ 61,700.

Here are some events to watch this week:

  • Fed rate decision, factory orders and US durable goods, Wednesday
  • OPEC + meeting on production, Thursday
  • Bank of England rate decision, Thursday
  • US Trade, Initial Unemployment Claims, Thursday
  • Unemployment in the US, Non-Farm Payrolls, Friday

Some of the main movements in the markets:

Stocks

  • S&P 500 futures were down 0.1% at 6:55 am in London. The S&P 500 rose 0.2%
  • Nasdaq 100 futures were stable. The Nasdaq 100 rose 0.4%
  • Japan’s Topix Index fell 0.6%
  • Australia’s S & P / ASX 200 Index lost 0.6%
  • South Korea’s Kospi rose 1.2%
  • Hong Kong’s Hang Seng Index lost 0.3%
  • China’s Shanghai Composite Index lost 1.2%
  • Euro Stoxx 50 futures fell 0.2%

Currencies

  • The Japanese yen was at 113.68 to the dollar, up 0.3%.
  • The offshore yuan was at 6.3961 to the dollar.
  • The Bloomberg Dollar Spot Index held steady
  • The euro is trading at $ 1.1606

Captivity

  • The 10-year Treasury yield was 1.55%.
  • The yield on Australia’s 10-year bonds fell two basis points to 1.89%.

Raw Materials

  • West Texas Intermediate crude was at $ 84.32 a barrel, up 0.3%
  • Gold was at $ 1,793.97 an ounce

© 2021 Bloomberg


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