Tuesday, January 18

Stocks and futures slide as China fuels inflation concerns: markets wind down


Shares and equity futures fell on Wednesday as Chinese data fueled concerns about inflationary pressures in the global economy. Treasury yields rose ahead of a report on US consumer prices.

MSCI Inc.’s Asia-Pacific stock gauge declined and the China market struggled after a report showed prices at factories grew at the fastest pace in 26 years. Retail inflation also beat estimates. China’s real estate sector continues to dampen confidence: developer Fantasia Holdings Group Co. sank and took China into debt Evergrande Group faces a test of payment in dollar bonds.

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US and European futures fell after the S&P 500 fell for the first time in nine sessions, hit by financial stocks. The Nasdaq 100 skidded on Tesla’s loss of $ 199 billion in value amid a string of negative headlines.

Longer-maturing US Treasuries rallied and the dollar rallied. Yields on US Treasury inflation-protected securities approached record lows.

Traders are awaiting Wednesday’s US consumer price inflation data, which may give the highest impression since December 1990. Persistent price pressures accelerating the tightening of monetary policy are among the key risks to global stocks, which remain near record highs.

San Francisco Fed Chair Mary Daly said she expected “staggering” inflation to decline next year as supply chain problems related to the pandemic diminish. St. Louis Fed Chairman James Bullard highlighted the pricing power of companies and reiterated that he is forecasting two rate hikes in 2022.

“Because we haven’t seen inflation in a while, people are not used to it,” Drew Matus, chief market strategist at MetLife Investment Management, told Bloomberg Television. “What we should expect over the next half year is that as people better understand what the Fed could do, we will see more volatility.”

Oil held steady, while iron ore slumped amid declining prospects for steel demand due to China’s housing woes.

In cryptocurrencies, Bitcoin was trading below $ 67,000.
Shares of Coinbase Global Inc. fell 13% in extended trading after the largest U.S. digital asset exchange reported worse-than-expected results.

What to watch this week:

  • The Central Decision-Making Committee of the Communist Party of China meets until Thursday
  • US Wholesale Inventories, CPI, Initial Jobless Claims Wednesday
  • Marked US bond is closed in observance of Veterans Day on Thursday
  • China celebrates its annual Singles Day, the world’s largest shopping festival, when e-commerce giants like Alibaba and JD.com Inc. lure shoppers with bargains on Thursday.

Stocks

  • S&P 500 futures were down 0.3% at 6:15 am in London. The S&P 500 fell 0.4%
  • Nasdaq 100 futures fell 0.2%. The Nasdaq 100 fell 0.7%
  • Japan’s Topix Index fell 0.5%
  • Australia’s S & P / ASX 200 Index fell 0.1%
  • South Korea’s Kospi Index fell 1.1%
  • Hong Kong’s Hang Seng Index fell 1%
  • China’s Shanghai Composite Index fell 0.8%
  • Euro Stoxx 50 futures fell 0.2%

Currencies

  • The Japanese yen was at 112.89 per dollar
  • The offshore yuan was at 6.3923 to the dollar.
  • Bloomberg’s dollar spot index rose 0.1%
  • The euro changed little to $ 1.1579

Captivity

  • The 10-year Treasury yield rose two basis points to 1.46%.
  • The yield on Australia’s 10-year bonds fell about five basis points to 1.73%.

Raw Materials

  • West Texas Intermediate crude rose 0.2% to $ 84.35 a barrel
  • Gold was at $ 1,825.42 an ounce, down 0.4%.

© 2021 Bloomberg


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