(Bloomberg) — Asian stocks dipped while U.S. and European equity futures were mixed Monday, as liquidity concerns weighed on Chinese shares and benchmark Treasury yields traded around a one-year high. The dollar climbed.
Chinese shares extended declines on concern the nation’s economic recovery portends less accommodative monetary policy. Japan eked out a modest gain. S&P 500 and Nasdaq 100 futures fluctuated, while European contracts pointed higher. The S&P 500 closed up Friday, aided by rallies in financial and industrial shares. The Nasdaq 100 slid amid the rotation to value equities.
Ten-year Treasury yields stayed above 1.6% as vaccinations and the $1.9 trillion U.S. fiscal stimulus keep the spotlight on inflation risk in a recovering economy. Australian and New Zealand 10-year rates rose.
In Hong Kong, Xiaomi Corp. surged after a temporary halt to a U.S. ban, while Tencent Holdings Ltd. fell on expectations that it faces increased regulatory supervision. Elsewhere, oil climbed and Bitcoin traded around $60,000 after surpassing $61,000 on the weekend in a meteoric rise.
Markets are preoccupied with rising long-term borrowing costs and their implications for reflation trades and the rotation in the stock market from growth to value shares. The Federal Reserve decision later in the week is one of a slew due from central banks globally.
While valuations across equities and credit are elevated, it’s hard not to be positive on risk assets, though “the change of pace in markets last week maybe also suggests a lot is priced already,” Patrik Schowitz, global multi-asset strategist at JPMorgan Asset Management, said in a note.
Treasury Secretary Janet Yellen said U.S. inflation risks remain subdued despite the Biden administration stimulus. A strong recovery from the Covid-19 recession is likely to prompt Fed Chair Jerome Powell and his colleagues to lift interest rates in 2023, but that isn’t going to show up in their forecasts this week, a Bloomberg survey of economists showed.
China’s economic activity surged in the first two months of the year. At the same time, the figures showed an uneven recovery with strong industrial output fueled by exports but lagging consumer spending.
These are some key events this week:
Fed Chair Jerome Powell will likely reaffirm his no-tightening policy stance at the Fed policy meeting Wednesday.Bank of England rate decision Thursday. BOE is expected to leave monetary policy unchanged.Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing Friday.
These are the main moves in markets:
Stocks
S&P 500 futures fell 0.1% as of 6:10 a.m. in London. The S&P 500 Index rose 0.1%. Nasdaq 100 futures slipped 0.2%.Japan’s Topix index rose 0.9%.Australia’s S&P/ASX 200 Index was flat.South Korea’s Kospi index shed 0.3%.Hong Kong’s Hang Seng Index lost 0.1%.China’s CSI 300 Index fell 2.7%.Euro Stoxx 50 futures rose 0.3%.
Currencies
The yen was at 109.34 per dollar, down 0.3%.The offshore yuan fell to 0.3% to 6.5149 per dollar.The Bloomberg Dollar Spot Index rose 0.3%.The euro traded at $1.1929, down 0.2%.
Bonds
The yield on 10-year Treasuries edged up to 1.63%.Australia’s 10-year bond yield jumped nine basis points to 1.79%.
Commodities
West Texas Intermediate crude rose 0.5% to $65.96 a barrel.Gold was at $1,723 an ounce, down 0.2%.
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.
