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Stocks fall, futures waver as China saps sentiment: markets wrap

Apple fell in extended trading amid concern over slower growth, while Alphabet rose on Google’s strong sales.
Image: David Paul Morris/Bloomberg

Asian stocks declined Wednesday as a rout in China and a mixed response to major US technology earnings spurred caution. Treasuries held a climb ahead of the Federal Reserve’s policy decision.

MSCI Inc.’s Asia-Pacific equity gauge retreated to the lowest level since December. China fell further and Hong Kong swung between gains and losses amid this week’s plunge on a regulatory crackdown by Beijing that’s stirred questions about how far officials will go to curb big companies. The Hang Seng Index is nearing a bear market, despite Chinese state media’s efforts to reassure investors.

US contracts fluctuated following the tech-heavy Nasdaq 100’s biggest decline in more than two months, with the S&P 500 also lower. While earnings have bolstered US shares, results from Apple Inc., Microsoft Corp. and Alphabet Inc. got a mixed response: Apple fell in extended trading amid concern over slower growth, while Alphabet rose on Google’s strong sales.

A flight-to-quality sparked by the China selloff and a solid 5-year auction boosted Treasuries overnight, and they retained the gains. The dollar snapped a two-day retreat and the offshore yuan pared a slide.

This week’s tumble in Chinese stocks is adding to global market unease, with investors already concerned about the economic recovery given the spread of the Covid-19 delta variant. Traders are also awaiting the Federal Reserve policy meeting, where officials are expected to consider when and how to taper the central bank’s $120 billion in monthly bond purchases.

“There are a lot of things going on in the Chinese markets which keeps us neutral,” Nupur Gupta, a portfolio manager at Eastspring Investments, said on Bloomberg Television. “Not just in regard to the tech regulation but also macro policy has been tightening over the last few months as China was the first in, first out from the pandemic and the effect of that has been seen on economic data.”

Elsewhere, Australian officials prolonged Sydney’s month-long lockdown by at least another four weeks to tackle a delta strain outbreak. Australia’s shares declined. South Korea and Thailand posted record daily infections and US health officials returned to tighter guidelines for the use of masks.

West Texas Intermediate crude oil was trading above $72 a barrel and Bitcoin again climbed above $40 000, continuing a recent recovery.

Here are some key events to watch this week:

  • Facebook, Amazon report earnings this week
  • Federal Reserve policy meeting concludes Wednesday
  • US GDP data are due Thursday

Here are the main moves in the markets:

Stocks

  • S&P 500 futures were steady as of 7 a.m. in London. The S&P 500 fell 0.5%
  • Nasdaq 100 futures were little changed. The Nasdaq 100 fell 1.1%
  • Japan’s Topix index fell 1%
  • Australia’s S&P/ASX 200 lost 0.7%
  • South Korea’s Kospi index fell 0.2%
  • Hong Kong’s Hang Seng Index rose 0.9%
  • China’s Shanghai Composite fell 0.6%
  • Euro Stoxx 50 futures increased 0.1%

Currencies

  • The Japanese yen was at 109.83 per dollar
  • The offshore yuan was at 6.5167 per dollar, up 0.2%
  • The Bloomberg Dollar Spot Index was steady
  • The euro traded at $1.1819

Bonds

  • The yield on 10-year US Treasuries was at 1.23%
  • Australia’s 10-year bond yield fell five basis points to 1.15%

Commodities

  • West Texas Intermediate crude added 0.6% to $72.11 a barrel
  • Gold rose 0.4% to $1 806.78 an ounce
© 2021 Bloomberg

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