Asian stocks were mixed on Monday amid data showing more stable economic growth in China, as well as ongoing challenges in the nation’s troubled real estate. Treasury bonds were stable and the dollar fell.
Stocks fluctuated in Hong Kong and fell in China, where traders weighed more than expected on retail sales and industrial production, the central bank’s liquidity support and a drop in house prices. Japanese equities gained, with stimulus plans softening the blow of an economic contraction. European and S&P 500 futures saw little change, while Nasdaq 100 contracts rose.
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Beijing’s crackdown on real estate leverage is amidst headwinds for the world’s second-largest economy. Officials are now expected to try to help struggling developers. Chinese junk dollar bonds extended a rally.
Sovereign bond markets remained comparatively quiet after a period of sharp swings due to uncertainty about whether high inflation will prove sticky and lead to interest rate hikes. Bond market inflation expectations over the next decade are close to the highest since 2006.
Recent swings in fixed income point to concerns that central banks will have to tighten policies faster than expected to curb sustained inflation. By contrast, global stocks near record highs indicate that equity investors are reassured by corporate strength and arguments that price pressures are transitory.
“We’ve seen inflation impressions that we haven’t seen in decades,” Terri Jacobsen, managing director of UBS Private Wealth Management, said on Bloomberg Television. He added that stocks may continue to rally as global supply chain problems are resolved and corporate profits remain strong, with the Federal Reserve being patient with tightening policies.
Fed Bank of Minneapolis Chairman Neel Kashkari said the US central bank should not overreact to high inflation, even if it causes pain, because it is likely to be temporary. Treasury Secretary Janet Yellen said that controlling the Covid-19 virus in the United States is the key to easing price pressures.
Meanwhile, President Joe Biden will meet virtually with Chinese President Xi Jinping on Monday. Tensions between the two countries have been building over issues such as Taiwan and restrictions on sales of US technology to China.
In commodities, oil fell as traders wait to see what Biden could do to ease gasoline prices amid mounting criticism about the impact of rising costs. Aluminum and base metals fell, in part due to China’s real estate slowdown.
Meanwhile, Elon Musk raised the idea of selling more Tesla Inc. shares in an online match with US Senator Bernie Sanders. Musk dumped nearly $ 7 billion in Tesla stock over the past week, which weighed on the EV maker’s stock.
What to watch this week:
- President Joe Biden, President Xi Jinping to meet virtually. Monday
- Fed Presidents Thomas Barkin, Esther George, Raphael Bostic, Patrick Harker speak at various events. Tuesday
- Reserve Bank of Australia Governor Philip Lowe delivers a speech. Tuesday
- Minutes of the November RBA meeting. Tuesday
- US retail sales are set to show an acceleration in October as consumer demand remains resilient. Tuesday
- Euro zone CPI. Wednesday
- Conference Board US Leading Index, Initial Unemployment Claims. Thursday
- Richard Clarida and Mary Daly of the Fed speak at the Asia Economic Policy Conference.
- S&P 500 futures were flat at 7am in London. The S&P 500 rose 0.7%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 1%
- Japan’s Topix index rose 0.4%
- Australia’s S & P / ASX 200 Index rose 0.4%
- South Korea’s Kospi rose 1%
- Hong Kong’s Hang Seng Index rose 0.1%
- China’s Shanghai Composite Index lost 0.2%
- Euro Stoxx 50 futures fell 0.1%
- The Japanese yen was at 113.94 per dollar.
- The offshore yuan was trading at 6.3773 to the dollar.
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was at $ 1.1458, up 0.1%
- The 10-year Treasury yield fell one basis point to 1.55%.
- Australia’s 10-year bond yield fell three basis points to 1.77%.
- West Texas Intermediate crude fell 0.9% to $ 80.05 a barrel
- Gold was at $ 1,858.28 an ounce, down 0.3%.
© 2021 Bloomberg