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Most Asian Stocks, U.S. Futures Dip; Lira Slides: Markets Wrap

(Bloomberg) -- Most Asian stocks dipped Monday as traders weighed inflation risks, a Covid-19 outbreak in China and earnings prospects for major technology firms. Turkey’s lira slid to a record low amid a diplomatic spat.Most Read from BloombergCities' Answer to Sprawl? Go Wild.Why Americans and Britons Are Rushing to Buy Idyllic Homes in ItalyHamburg Is at the Heart of Germany’s Growing Dilemma Over ChinaOne of California’s Wealthiest Counties Could Run Out of Water Next SummerThe Top Money Mak Read More...

(Bloomberg) — Most Asian stocks dipped Monday as traders weighed inflation risks, a Covid-19 outbreak in China and earnings prospects for major technology firms. Turkey’s lira slid to a record low amid a diplomatic spat.

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Equities posted modest losses in Japan, Hong Kong and China, where the central bank boosted a daily liquidity injection. Investors are assessing a delta-variant virus outbreak in China that’s expected to worsen as well as economic challenges from a real-estate sector slowdown.

S&P 500 and Nasdaq 100 futures wavered and the 10-year U.S. Treasury yield rose. Federal Reserve Chair Jerome Powell on Friday flagged inflation could stay higher for longer, while making clear the Fed will begin tapering bond purchases shortly but stay patient on rate hikes. The dollar was steady and the yen retreated.

The lira tumbled after President Recep Tayyip Erdogan said the ambassadors of 10 nations, including the U.S., Germany and France, were no longer welcome in Turkey. They had demanded the release of a prominent businessman and philanthropist.

Global equities have remained resilient in the face of risks from price pressures stoked by supply-chain bottlenecks and higher energy costs. Treasury Secretary Janet Yellen is among those counseling that the inflation situation reflects temporary pain that will ease in the second half of 2022. But investors are wary that tighter monetary policy to keep inflation in check will stir volatility in markets.

The Fed is becoming more hawkish as it responds to inflationary pressures “so we can expect more rate hikes than the market is pricing right now,” Rajeev de Mello, Deep Learning Investments managing director, said on Bloomberg Television. “There is the worry that faster tapering or a more hawkish Fed will create the risk of a slowdown.”

In China, officials plan to widen property-tax trials to more areas and start taxing residential owners. In the U.S., the five largest technology companies are set to report earnings, heralding a test of investor sentiment.

Elsewhere, the European Central Bank’s meeting this week will be closely watched for guidance on its pandemic bond-buying program.

Crude oil extended a rally. Saudi Arabia said that the OPEC+ alliance should maintain its cautious approach to managing global crude supplies given the threat to demand still posed by the pandemic. Bitcoin was trading around $61,800.

Here are some events to watch this week:

  • Earnings: Amazon, Apple, Facebook, Microsoft, Twitter, Samsung Electronics, HSBC Holdings, China Vanke, PetroChina, Ping An Insurance Group

  • Australia CPI, Wednesday

  • U.S. wholesale inventories, U.S. durable goods, Wednesday

  • Bank of Japan monetary policy decision, briefing, Thursday

  • ECB rates decision, President Christine Lagarde briefing, Thursday

  • U.S. GDP, initial jobless claims, Thursday

  • G-20 joint finance and health ministers meeting ahead of the weekend leaders’ summit, Friday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.1% as of 10:45 a.m. in Tokyo. The S&P 500 fell 0.1%

  • Nasdaq 100 futures slipped 0.1%. The Nasdaq 100 fell 0.9%

  • Japan’s Topix index fell 0.1%

  • Australia’s S&P/ASX 200 Index rose 0.5%

  • South Korea’s Kospi index was little changed

  • Hong Kong’s Hang Seng Index fell 0.3%

  • China’s Shanghai Composite Index dropped 0.1%

Currencies

  • The Japanese yen traded at 113.73 per dollar, down 0.2%

  • The offshore yuan traded at 6.3842 per dollar

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was at $1.1642

Bonds

Commodities

  • West Texas Intermediate crude rose 0.8% to $84.44 a barrel

  • Gold was at $1,793.12 an ounce

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