(Bloomberg) — Asian stocks and U.S. futures were steady Monday as traders weighed inflation risks, China’s outlook and looming earnings reports from big technology firms. Turkey’s lira slid to a record low amid a diplomatic spat.
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Equities dipped in Japan and were mixed in China, where the central bank boosted a daily liquidity injection and officials expanded a property-tax trial. Signs that it would take at least five years before authorities impose any nationwide property tax bolstered some industrial metals.
S&P 500 and Nasdaq 100 futures fluctuated and the 10-year U.S. Treasury yield edged up. Federal Reserve Chair Jerome Powell on Friday flagged inflation could stay higher for longer. He made clear the Fed will soon start tapering bond purchases but stay patient on rate hikes. European futures climbed. The dollar and the yen slipped.
The lira fell after Turkey’s President Recep Tayyip Erdogan said 10 ambassadors, including from the U.S., Germany and France, were no longer welcome. They had demanded the release of a businessman and philanthropist.
Global equities have remained resilient despite risks from price pressures stoked by supply-chain bottlenecks and higher energy costs. Treasury Secretary Janet Yellen is among those counseling the inflation situation reflects temporary pain that will ease in the second half of 2022. Investors are wary that tighter monetary policy to keep inflation in check will stir volatility.
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.”
Traders are also monitoring an outbreak of the delta virus strain in China that is expected to worsen. The nation sought to allay concerns about the economy’s slowdown with a lengthy state media commentary outlining how the government is managing risks and remains confident about achieving its targets for the year.
“This new Covid cluster probably will mean that retail sales are going to be a little weaker heading into the year-end,” Julia Wang, a global market strategist at JPMorgan Private Bank, said on Bloomberg Television. “Having said that, the overall impact should be quite short-lived, because we can see that the authorities are generally getting better with testing, tracing and containing these clusters.”
In the U.S., the five largest technology companies are set to report earnings in coming days, 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.
Gold advanced toward $1,800 an ounce and 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 $62,000.
Here are some events to watch this week:
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Earnings: Amazon, Apple, Facebook, Microsoft, Twitter, Samsung Electronics, China Vanke, PetroChina, Ping An Insurance Group
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Australia CPI, Wednesday
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U.S. wholesale inventories, U.S. durable goods, Wednesday
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Bank of Japan monetary policy decision, briefing, Thursday
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ECB rates decision, President Christine Lagarde briefing, Thursday
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U.S. GDP, initial jobless claims, Thursday
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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
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S&P 500 futures rose 0.1% as of 6:56 a.m. in London. The S&P 500 fell 0.1%
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Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 0.9%
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Japan’s Topix index fell 0.2%
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Australia’s S&P/ASX 200 Index rose 0.3%
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South Korea’s Kospi index rose 0.6%
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Hong Kong’s Hang Seng Index was little changed
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China’s Shanghai Composite Index rose 0.4%
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Euro Stoxx 50 futures climbed 0.3%
Currencies
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The Japanese yen traded at 113.58 per dollar, down 0.1%
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The offshore yuan traded at 6.3748 per dollar
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The Bloomberg Dollar Spot Index dipped 0.1%
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The euro was at $1.1659
Bonds
Commodities
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West Texas Intermediate crude rose 0.9% to $84.52 a barrel
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Gold was at $1,800.51 an ounce, up 0.4%
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