Saturday, January 22

Asia stocks fall with Evergrande and Omicron in focus: markets close


Asian stocks followed their US peers lower on Friday as traders weighed the economic threat of virus restrictions against optimism about the efficacy of vaccines.

Equity markets posted modest losses across the region. US futures turned shortly after the benchmark indices ended a three-day rally amid losses in the consumer discretionary and real estate sectors. Treasuries were flat, with a lackluster sale of 30-year bonds reducing gains on Thursday. Oil was trading below $ 71 a barrel and Bitcoin was rising. The dollar held gains overnight.

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Chinese markets are in focus after China Evergrande Group and Kaisa Group Holdings Ltd. officially defaulted on their dollar debt. Evergrande shares fell about 2%. Shares of Kaisa, which are listed in Hong Kong, were suspended.

China’s central bank took further steps to limit the strength of the yuan, setting the weakest benchmark rate relative to estimates compiled by Bloomberg since 2018, a day after policymakers raised the reserve ratio. of foreign currency for banks for the second time this year. The yuan shrugged to advance.

Investors are weighing the cost of containing omicron tension amid growing concerns that the economic rebound will slow. One study has found that omicron is 4.2 times more transmissible than the delta variant in its early stages.

“Ultimately, the problem from a health perspective is that even if Omicron turns out to be less severe, as initial indications have pointed out so far, an increase in transferability could offset that,” said a team of strategists at Deutsche Bank. , including Jim Reid. That could mean there are more people in the hospital, “even if a smaller proportion of them are severely affected.”

Meanwhile, the rally in global equities faces more potential hurdles ahead of US consumer inflation figures on Friday and a Federal Reserve meeting next week that may provide clues to the pace of the downside. gradual and rising interest rates.

“Several FOMC participants, including President Powell, have signaled a radical shift in their policy stance, catalyzed by growing discomfort with high inflation in a context of robust growth and continued strengthening of labor market conditions,” economists commented. and Morgan Stanley strategists, including Ellen Zentner, wrote in a note Thursday. “We reviewed our call from the Fed and now expect the FOMC to begin raising rates in September 2022, two quarters ahead of our previous forecast.”

The dollar was flat. It rose Thursday after a report showed US state jobless claims fell to the lowest level since 1969. However, economists pointed to difficulties in seasonal adjustments to reach that number.

The Bloomberg’s Markets Live team is conducting a survey on asset views for 2022. It is anonymous, takes about 2 minutes, and the results will be shared by the end of December.

Here are some key events to watch this week:

Some of the main movements in the markets starting at 2 pm in Tokyo:

Stocks

  • S&P 500 futures gained 0.1%. The index fell 0.7% on Thursday.
  • Nasdaq 100 futures advanced 0.1%. The benchmark index fell 1.5% on Thursday.
  • Topix fell 0.4%
  • Hang Seng fell 0.5%.
  • The Shanghai composite was down 0.3%.
  • The S & P / ASX 200 fell 0.4%.
  • Kospi was down 0.7%.
  • Euro Stoxx 50 futures fell 0.3%.

Coins

  • The Bloomberg Dollar Spot Index was flat.
  • The euro changed little to $ 1.1299
  • The Japanese yen was stable at 113.53 per dollar.
  • The offshore yuan was at 6.3694.

Captivity

  • The 10-year Treasury yield fell about one basis point to 1.49%.
  • The yield on Australian 10-year bonds fell about four basis points to 1.63%.

Raw Materials

  • West Texas Intermediate crude was stable at $ 70.94 a barrel.
  • Gold was up 0.2% at $ 1,777.92 an ounce.

© 2021 Bloomberg


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