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Stocks, futures mixed after Powell, China data: markets wrap

Oil tumbled below $73 a barrel on building US fuel inventories and a potential OPEC+ agreement to increase supply.
Image: Paul Yeung/Bloomberg

Asian stocks were mixed Thursday as traders digested data suggesting China’s growth rebound is steadying as well as Federal Reserve Chair Jerome Powell’s signal that it’s still too early in the US recovery to pare stimulus.

Shares fell in Japan as Covid-19 cases jumped in Tokyo. Hong Kong rallied, aided by the technology sector on a report of possible cooperation between Alibaba and Tencent US contracts fluctuated after modest S&P 500 and Nasdaq 100 gains on Powell’s reassurance over accommodative policy and reiteration that high inflation will likely moderate. European futures slipped. Treasury yields fell and the dollar held a retreat.

In China, second-quarter economic growth slowed largely in line with forecasts, while a pick up in consumer spending indicated a more balanced recovery. The central bank rolled over a portion of medium-term policy loans coming due, a move that confirms its intention to keep monetary policy largely unchanged. Futures on 10-year Chinese sovereign bonds declined.

Oil tumbled below $73 a barrel on building US fuel inventories and a potential OPEC+ agreement to increase supply. Gold was around a four-week high, aided by inflation concerns and Powell’s comments on stimulus.

The Fed’s likely timeline for tapering $120 billion in monthly bond purchases, and the spread of the delta Covid-19 variant, are among key variables for investors with global stocks near all-time highs. Another concern is the possibility that recoveries in economic growth and corporate earnings are peaking.

“FOMC chair Jay Powell provided a more dovish than anticipated testimony to Congress,” Kim Mundy, a strategist at the Commonwealth Bank of Australia, wrote in a note. “We continue to expect the FOMC will announce its intention to begin tapering its asset purchases in the September meeting and start tapering in October.”

Powell also stressed in comments to the House Financial Services Committee that while officials expect high inflation to be temporary, they would react if inflation turned out to be persistently and materially above their 2% target. The latest data showed US producer prices surged in June, exceeding estimates, adding to signs of rising costs as the economy reopens.

Meanwhile, the US said it has no plans to revive a regular economic dialogue with China suspended under the Trump administration, as tension between Beijing and Washington continues to bubble. In South Korea, the won was higher amid a hawkish tilt by the central bank, which plans to normalise policy later this year.

Here are some events to watch this week:

  • Bank of Japan interest rate decision Friday

These are some of the main moves in financial markets:

Stocks

  • S&P 500 contracts shed 0.1% as of 7 a.m. in London. The S&P 500 rose 0.1%
  • Nasdaq 100 contracts added 0.1%. The Nasdaq 100 rose 0.2%
  • Japan’s Topix index lost 1.2%
  • Australia’s S&P/ASX 200 index shed 0.4%
  • South Korea’s Kospi index climbed 0.5%
  • Hong Kong’s Hang Seng index rose 1%
  • China’s Shanghai Composite index increased 0.9%
  • Euro Stoxx 50 futures fell 0.3%

Currencies

  • The Japanese yen traded at 109.84 per dollar, up 0.1%
  • The offshore yuan was at 6.4616 per dollar
  • The Bloomberg Dollar Spot Index was steady
  • The euro was at $1.1841

Bonds

  • The yield on 10-year Treasuries was at 1.33%, down about one basis point
  • Australia’s 10-year bond yield fell five basis points to 1.29%

Commodities

  • West Texas Intermediate crude was at $72.50 a barrel, down 0.9%
  • Gold was at $1 828.17 an ounce
© 2021 Bloomberg

COMMENTS   1

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Just buy some gold mining shares, not only are they 30% to 40% cheaper but it is a good Rand hedge and world chaos hedge also.

Platinum miners are cheap too.

Do you people know what the new electronic chip manufacturers will need? Gold, Silver and copper

End of comments.

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