Asian equities erased gains Tuesday and US stock futures slipped as traders await inflation data, a Treasury auction and corporate earnings to assess the market outlook. Bond yields and the dollar climbed.
Shares fell in China, where concern about the financial health of a key bad-debt manager soured the mood. Data showed a surge in China’s trade, though export growth missed forecasts in March. US equity futures dipped after the S&P 500 inched back from a record. European contracts were steady.
The cost of insuring Asia’s investment-grade bonds rose after a record spike in yields on the debt of the state-owned bad debt manager China Huarong Asset Management Co. In Treasuries, the focus turns to Tuesday’s 30-year auction after sales of three- and 10-year notes attracted decent demand.
While the Chinese trade data signaled the global recovery from the pandemic is on track, stocks are precariously poised near records given spikes in Covid-19 cases and uneven vaccine rollouts. Concerns about higher borrowing costs have eased on central banks’ assurances that interest rates will remain low, but inflation risk remains in focus. US consumer prices data are due Tuesday.
“It’s not too late to focus on the relationary trade,” Suresh Tantia, senior investment strategist at Credit Suisse, said on Bloomberg TV. “The sectors which are more exposed to cyclical recovery and inflation will do better than growth stocks in the next three- to six months.”
Elsewhere, Treasury Secretary Janet Yellen will decline to name China as a currency manipulator in her first semiannual foreign-exchange report, according to people familiar with the matter, allowing the US to sidestep a fresh clash with Beijing.
Oil traded at around $60 a barrel. Bitcoin climbed back above $60 000 ahead of a listing by the largest US cryptocurrency exchange.
Some key events to watch this week:
- Banks and financial firms begin reporting first-quarter earnings, including JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., Morgan Stanley, Goldman Sachs Group Inc.
- The US releases inflation data Tuesday.
- Economic Club of Washington hosts Fed Chair Jerome Powell for a moderated Q&A on Wednesday.
- US Federal Reserve releases Beige Book on Wednesday.
- US data including initial jobless claims, industrial production and retail sales come Thursday.
- China economic growth, industrial production and retail sales figures are on Friday.
These are some of the main moves in financial markets:
- S&P 500 futures fell 0.1% as of 7:10 a.m. in London. The index was steady Monday.
- Japan’s Topix Index rose 0.2%.
- China’s Shanghai Composite Index shed 0.6%.
- Hong Kong’s Hang Seng Index was up 0.4%.
- South Korea’s Kospi Index climbed 0.9%.
- Australia’s S&P/ASX 200 Index dipped 0.1%.
- Euro Stoxx 50 futures were little changed.
- The Bloomberg Dollar Spot Index rose 0.1%.
- The yen was down 0.3% at 109.66 per dollar.
- The euro slipped 0.1% to $1.1895.
- The offshore yuan was at 6.5566 per dollar, dropping 0.1%.
- The yield on 10-year Treasuries rose three basis points to 1.69%.
- Australia’s 10-year yield was three basis points higher at 1.80%.
- West Texas Intermediate crude was up 0.3% at $59.88 a barrel.
- Gold was at $1,727.49 an ounce, sliding 0.3%.