Tuesday, January 18

Stocks tumble, futures falter amid Fed, virus risks – markets wind down


Stocks fell on Tuesday and US equity futures faltered amid caution over economic risks from the omicron virus strain and efforts by the central bank to curb high inflation. Treasury bonds and the dollar maintained gains.

MSCI Inc.’s Asia-Pacific stock index fell for a third session, with Chinese property and technology stocks struggling. Concerns about Beijing’s crackdown on China’s indebted real estate sector have flared again, damaging confidence. The nation’s real estate recession likely undermined economic activity in November.

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S&P 500, Nasdaq 100 and European stock contracts fluctuated. The S&P 500 fell from a record Monday and the tech-heavy Nasdaq 100 underperformed.

Treasury yields fell in US hours, led by the 30-year bond. Traders are prepared for the Federal Reserve to reduce the stimulus more quickly and signal an interest rate takeoff in 2022, both potential economic challenges.

The Fed’s policy decision scheduled for Wednesday is among 20 central bank meetings this week that could spark market changes. Investors are grappling with the implications of reduced support for monetary policy as they await more clarity on omicron’s economic threats.

“Volatility will remain high during all rate decisions this week by the Fed, the ECB and the BOE,” Edward Moya, senior market analyst at Oanda Corp. wrote in a note. “2022 is still expected to be a history of strong global growth, but accelerated aggressiveness from the central bank could be the only thing helping to generate the first major pullback in US equities. ”

In commodities, crude oil extended a pullback in part on potential hurdles to global reopening if omicron leads to broader mobility restrictions. Prices of other commodities also weakened, prompting declines in commodity currencies, led by the Australian dollar.

‘Bubble assets’

Cryptocurrencies leveled off after another fade. Bitcoin, now trading around $ 47,000, is down more than 30% from a November record high.

“It’s been a strong year, we expect it to end strong, but investors need to be careful with bubble assets,” Eva Ados, ERShares chief investment strategist, told Bloomberg Television. “The worst when it comes to inflation is behind us. Tapering has been incorporated in some way. We are cautiously optimistic, but there are also many risks on the horizon. ”

On the virus front, the omicron variant abolished the protection provided by two doses of the Covid vaccines from Pfizer Inc. and AstraZeneca Plc as feared, the researchers found, increasing the risk of infection. China reported its first omicron case.

Meanwhile, Elon Musk accelerates his sale of Tesla Inc. shares after last month’s Twitter poll, as he exercises more options. The world’s richest person downloaded another 934,091 shares worth about $ 906.5 million to cover taxes on the exercise of 2.1 million options, according to regulatory documents dated Monday.

Here are some key events from this week:

  • Industrial production in the euro zone, Tuesday.
  • US PPI, Tuesday.
  • China releases November industrial production, retail sales data, on Wednesday.
  • Fed rate decision, Wednesday.
  • US Business Inventories, Retail Sales, Empire Manufacturing, Wednesday.
  • BOE rate decision, Thursday.
  • ECB rate decision, Thursday.
  • US Housing Start, Initial Jobless Claims, Industrial Production, Thursday.
  • BOJ monetary policy decision, Friday.
  • Quarterly rebalancing of the S&P Dow Jones Indices effective after markets close on Friday.
  • Day of “quadruple witchcraft” in the US market, when options and futures on indices and stocks expire, Friday.

Some of the main movements in the markets:

Stocks

  • S&P 500 futures were up 0.1% at 6:03 am in London. The S&P 500 fell 0.9%
  • Nasdaq 100 futures were up 0.1%. The Nasdaq 100 fell 1.5%
  • Japan’s Topix Index fell 0.2%
  • Australia’s S & P / ASX 200 Index Stable
  • South Korea’s Kospi Index fell 0.4%
  • Hong Kong’s Hang Seng Index fell 1.4%
  • China’s Shanghai Composite Index fell 0.6%
  • Euro Stoxx 50 futures increased 0.1%

Coins

  • The Japanese yen was at 113.58 to the dollar.
  • The offshore yuan was at 6.3697 to the dollar.
  • The Bloomberg Dollar Spot Index held steady
  • The euro was at $ 1.1280

Captivity

  • The 10-year Treasury yield was 1.42%.
  • The yield on Australia’s 10-year bonds fell six basis points to 1.54%.

Raw Materials

  • West Texas Intermediate crude was at $ 71.24 a barrel, down 0.1%.
  • Gold was at $ 1787.52 an ounce

© 2021 Bloomberg


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