Stocks, US futures fall as mood sours; yen rises: markets wrap

Chinese coal futures plunged amid efforts by officials to contain power costs.
Image: Bloomberg

Most Asian stocks fell Thursday as investors weighed corporate earnings, elevated inflation and the outlook for China’s property sector. Japan’s yen strengthened.

Equities retreated in Japan and Hong Kong and were little changed in China. While ailing China Evergrande Group sank on a worsening cash squeeze, other developers rallied after regulators said real-estate risks are controllable. US and European futures were in the red following a mixed Wall Street session in which the S&P 500 neared a record and the tech-heavy Nasdaq 100 slipped.

Longer term Treasury yields trimmed an advance. The 10-year breakeven rate — a proxy for where investors see annual inflation rates over the next decade — touched the highest since 2013. A similar measure for Japan reached a three-year high.

The dollar was little changed, crude oil was steady and Bitcoin retreated from an all-time peak. Chinese coal futures plunged amid efforts by officials to contain power costs.

Corporate results have tempered but not dissipated worries that cost pressures — stoked by an energy crunch and supply-chain snarls — could slow the pandemic recovery. Investors are also grappling with the prospect of reduced central bank support and watchful of the travails in China’s real-estate sector.

In the latest Federal Reserve comments, Governor Randal Quarles said he favours an initial move to slow monetary stimulus next month and is concerned by a broadening of inflationary pressures that could require a policy response.

The Fed is “trapped in a very difficult situation,” David Kudla, chief executive officer at Mainstay Capital Management, said on Bloomberg Television. That’s because of the possibility of reduced stimulus followed by rate hikes amid a significant slowing of economic expansion, he said.

Meanwhile, the US Food and Drug Administration cleared the way for Moderna Inc. and Johnson & Johnson Covid-19 booster shots. Russia is among countries stepping up virus restrictions to curb surging infections.

Events to watch this week:

  • US Conference Board leading index, US existing home sales, jobless claims, Thursday
  • Fed Chair Jerome Powell takes part in policy panel discussion, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures dropped 0.3% of 6:57 a.m. in London. The S&P 500 rose 0.4%
  • Nasdaq 100 contracts fell 0.4%. The Nasdaq 100 fell 0.1%
  • Japan’s Topix index fell 1.3%
  • Australia’s S&P/ASX 200 Index was little changed
  • South Korea’s Kospi shed 0.2%
  • Hong Kong’s Hang Seng Index lost 1%
  • China’s Shanghai Composite Index was little changed
  • Euro Stoxx 50 futures were declined 0.5%

Currencies

  • The Japanese yen rose 0.3% to 113.98 per dollar
  • The offshore yuan was at 6.3934 per dollar
  • The Bloomberg Dollar Spot Index was little changed
  • The euro was at $1.1650

Bonds

  • The yield on 10-year Treasuries was at 1.65%
  • Australia’s 10-year bond yield was at 1.79%, down two basis points

Commodities

  • West Texas Intermediate crude was at $83.35 a barrel
  • Gold was at $1 785.08 an ounce, rising 0.2%
© 2021 Bloomberg

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To be expected, markets do not only go up.

Plus people are ignoring the RED OCTOBER … see you later folks …

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