Most Asian stocks and US futures fell Tuesday as the tailspin in China and Hong Kong sparked by Beijing’s sweeping regulatory overhaul again sapped sentiment. Traders are also awaiting major US technology earnings.
MSCI Inc.’s Asia-Pacific equity gauge retreated and a Hong Kong index of Chinese tech firms plunged more than 5%. China is clamping down on sectors ranging from internet platforms to education and real estate, as Xi Jinping’s Communist Party tightens its grip on the economy.
European contracts and US stock futures slipped after the S&P 500 hit a new peak. Earnings have helped Wall Street, with Tesla Inc. the latest firm to post better-than-expected performance. Apple Inc. and Alphabet Inc. are among companies due to unveil results next.
Treasuries climbed and the dollar was steady ahead of this week’s Federal Reserve policy meeting, where officials are expected to discuss an eventual tapering of stimulus. The real yield on US 10-year debt touched a record low, which for some reflects economic concerns from the spread of the delta coronavirus variant. The yen outperformed among Group-of-10 peers.
Beijing’s crackdown has left investors wondering which sectors might be targeted next and whether the selloff in Chinese equities increases the odds of wider risk aversion. At the same time, robust corporate profits and the ongoing rebound from the health crisis in the most-vaccinated nations are bulwarks for sentiment. Traders are also awaiting the Fed meeting for a steer on how inflationary pressures are shaping the monetary policy outlook.
“Equity markets have oscillated between inflation and growth fears, which should not coexist,” Esty Dwek, head of global market strategy at Natixis Investment Managers Solutions, wrote in a note. She expects “growth will hold up, the reopening will last and the Fed will err on the side of caution and maintain its accommodative stance,” while adding volatility also lies ahead.
Elsewhere, Bitcoin pared gains to trade around $37 000 after briefly topping $40 000. Crude oil made a modest advance as investors bet the global demand recovery will remain intact despite the Covid-19 resurgence.
Here are some key events to watch this week:
- Alphabet, Apple, Facebook, Amazon report earnings this week
- Federal Reserve policy meeting concludes Wednesday
- US GDP data are due Thursday
- S&P 500 futures fell 0.2% as of 7 a.m. in London. The S&P 500 rose 0.2%
- Nasdaq 100 futures lost 0.1%. The Nasdaq 100 climbed 0.1%
- Japan’s Topix index added 0.6%
- Australia’s S&P/ASX 200 index rose 0.5%
- South Korea’s Kospi index increased 0.3%
- Hong Kong’s Hang Seng Index fell 2.1%
- China’s Shanghai Composite Index lost 0.5%
- Euro Stoxx 50 futures fell 0.1%
- The Japanese yen was at 110.20 per dollar, up 0.2%
- The offshore yuan traded at 6.4827 per dollar
- The Bloomberg Dollar Spot Index was little changed
- The euro was at $1.1800
- The yield on 10-year Treasuries dipped one basis point to 1.28%
- Australia’s 10-year bond yield rose one basis point to 1.19%
- West Texas Intermediate crude rose 0.4% to $72.17 a barrel
- Gold was at $1 796 an ounce