Asian stocks fluctuated Monday as investors weighed the implications of surging energy prices and risks from China. The dollar dipped.
MSCI Inc.’s index of Asian shares edged up. Hong Kong had modest gains, while Japan slipped. Shares in Shanghai declined as materials stocks dropped on worries that power curbs are hurting manufacturing and lingering concerns about further regulatory curbs. US and European futures climbed.
Commodities such as iron ore and commodity-linked currencies like the Australian dollar jumped. West Texas Intermediate extended a rally to top $75 a barrel, while Brent hit the highest level since October 2018 on signs that the crude market is tightening because of a global energy crunch. Ten-year Treasury yields broke through the top of a range that’s held since mid-July, surpassing 1.4% after hawkish messages last week from the Federal Reserve and the Bank of England.
Bitcoin traded around $44 000. Digital currencies plunged Friday as China intensified its push to rein in crypto speculation and mining, but recovered much of the drop over the weekend.
While global equities notched their first weekly advance in three as traders shrugged off concerns over a Federal Reserve pullback in stimulus and contagion risks from China Evergrande Group, roadblocks remain. Investors are shifting more of their attention to China where an energy crisis is brewing and developers face liquidity pressures. The impact of higher bond yields on equity prices is also coming into focus.
“We seem to have gotten past the Fed tapering concerns,” Steve Brice, Standard Chartered Wealth Management chief investment officer, said on Bloomberg Television. “Clearly what’s going on in the Chinese economy is getting much more attention globally. Undoubtedly we will see a slowdown in the economy as we move into next year. The question now is to what extent that’s going to happen and the knock-on implications for global growth.”
Amid Evergrande developments, the group’s electric-car unit plunged in Hong Kong trading after it warned of a “serious shortage of funds” and scrapped plans to list in Shanghai. Seperately, Sunac China Holdings Ltd.’s shares and dollar bonds extended declines, as concerns grew about the developer’s financial health.
The euro was steady as the German election failed to produce a clear winner, raising investor concerns of a prolonged decision on the leadership of Europe’s biggest economy. Olaf Scholz of the Social Democrats inched ahead of Chancellor Angela Merkel’s conservatives.
Meanwhile in the US, House Speaker Nancy Pelosi pledged to pass a $550 billion infrastructure bill this week.
Here are some events to watch this week:
- Fed Chairman Jerome Powell, Treasury Secretary Yellen to testify at a Senate Banking Committee hearing Tuesday
- European Central Bank President Christine Lagarde speaks Tuesday
- Japan’s ruling party votes to elect leader, Wednesday
- Central bank chiefs Andrew Bailey (BOE), Haruhiko Kuroda (BOJ), Christine Lagarde (ECB) and Jerome Powell (Fed) participate in an ECB Forum panel, Wednesday
- House Financial Services Committee hearing on the Fed, Treasury’s pandemic response, Thursday
- China Caixin manufacturing PMI, non-manufacturing PMI, Thursday
- US manufacturing PMI, Friday
Some of the main moves in markets:
- S&P 500 futures rose 0.5% as of 6:56 a.m. in London. The S&P 500 rose 0.2%
- Nasdaq 100 futures rose 0.4%. The Nasdaq 100 was little changed
- Topix index was little changed
- Australia’s S&P/ASX 200 Index rose 0.7%
- Kospi index rose 0.2%
- Hang Seng Index rose 0.5%
- Shanghai Composite Index fell 0.7%
- Euro Stoxx 50 futures rose 0.8%
- The Japanese yen was at 110.63 per dollar, up 0.1%
- The offshore yuan was at 6.4597 per dollar
- The Bloomberg Dollar Spot Index dipped 0.1%
- The euro traded at $1.1721
- The yield on 10-year Treasuries was at 1.45%
- Australia’s 10-year bond yield was at 1.41%
- West Texas Intermediate crude rose 1.3% to $74.98 a barrel
- Gold added 0.5% to $1 759.62 an ounce