Tuesday, January 18

Stocks, futures on the rise; Inflation Risk Undermines Treasuries: Markets Close


Stocks rose along with US equity futures on Friday, bringing some relief to equities from inflation fears that still plague Treasuries.

MSCI Inc.’s Asia-Pacific gauge posted its biggest rise this week, helped by Japan’s stock market and Chinese tech stocks. The view that the worst of the Beijing regulatory blitz has safely passed sentiment. US and European contracts rose after the S&P 500 broke a two-day slide.

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The five-year notes triggered a continued selloff of Treasuries after a business holiday. The spread between 5- and 30-year yields narrowed, to the tightest since March 2020. A loss hit bonds Wednesday after the fastest US inflation in three decades stoked bets on a monetary tightening. faster.

The dollar maintained a rally on the footprint of inflation and caution sparked by a warning from the United States that Russia could be considering a possible invasion of Ukraine. Oil and gold fell, while Bitcoin was stable.

Global stocks are poised for their first weekly slide since early October, hit by signs that price pressures are expanding beyond pandemic-related disruptions. But changes in equity indices pale in comparison to bond market fluctuations, raising the question of whether equity investors are overly optimistic.

“Inflation could remain elevated in the coming months, and each inflation release that surpasses expectations has the potential to cause volatility in the equity and rate markets, but we do not yet expect inflation to derail the rally in equities,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note.

Meanwhile, President Xi Jinping delivered the first doctrine on the history of the Communist Party to a Chinese leader in 40 years, giving him the mandate to rule potentially for life. Xi’s “common prosperity” campaign to curb inequalities has spawned reforms that plagued Chinese sectors ranging from technology to property.

But there are tentative hopes that the restrictions will be eased, as Goldman Sachs Group Inc. predicts a brighter outlook for Chinese stocks. He said that onshore and offshore stocks will yield 16% and 13% in the next 12 months, respectively.

Stocks

  • S&P 500 futures were up 0.2% at 5:40 am in London. The S&P 500 was up 0.1%
  • Nasdaq 100 futures were up 0.3%. The Nasdaq 100 rose 0.3%
  • Japan’s Topix Index added 1.2%
  • Australia’s S & P / ASX 200 Index rose 0.8%
  • South Korea’s Kospi rose 1.5%
  • China’s Shanghai Composite Index increased 0.2%
  • Hong Kong’s Hang Seng Index rose 0.1%
  • Euro Stoxx 50 futures rose 0.1%

Currencies

  • The Bloomberg Dollar Spot Index was flat
  • The euro was at $ 1.1442
  • The Japanese yen was at 114.22 to the dollar, down 0.1%.
  • The offshore yuan was at 6.3899 to the dollar.

Captivity

  • The 10-year US Treasury yield increased by about one basis point to 1.56%.
  • The yield on Australia’s 10-year bonds stood at 1.80%, down two basis points.

Raw Materials

  • West Texas Intermediate crude fell 0.6% to $ 81.11 a barrel
  • Gold was at $ 1,859.43 an ounce, down 0.1%.

© 2021 Bloomberg


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