Stocks, futures rise as earnings support sentiment: markets wrap

Gold held above $1 800 an ounce and Bitcoin traded around $62 800.

Most Asian stocks rose Tuesday after a record S&P 500 close as corporate earnings and progress on President Joe Biden’s economic agenda helped sentiment even as the debate over inflation risks intensified.

Equities rose in Japan and fluctuated in China and Hong Kong. Traders digested a video call between China’s Vice Premier Liu He and US Treasury Secretary Janet Yellen on economic issues. The Chinese side said the call was “pragmatic, candid and constructive.”

US futures advanced, with Nasdaq 100 contracts outperforming. The tech-heavy gauge led US gains overnight amid a Tesla Inc. rally to a $1 trillion market value. Facebook Inc. was higher in late trading on strong user growth and a pledge to buy back as much as $50 billion more in stock.

The 10-year US Treasury yield edged up and the dollar was steady. The debate over price pressures continues, with former Treasury Secretary Lawrence Summers saying officials are unlikely to deal with “inflation reality” successfully until they fully recognise it.

A relatively solid earnings season is helping to counter concerns that elevated inflation and tightening monetary policy will slow the economic recovery from the pandemic. Some 81% of S&P 500 members have reported better-than-expected earnings so far. Traders are also monitoring escalating Covid-19 cases in China and other parts of the world.

Equity markets are “continuing their recovery and we expect this process to continue past big tech earnings” and this week’s European Central Bank meeting, where policy makers may flag the end to their pandemic bond-buying program, Sebastien Galy, senior macro strategist at Nordea Investment Funds, wrote in a note.

In China, Modern Land China Co. became the latest builder to miss a payment on a dollar bond, in a further sign of stress in the nation’s real estate sector. Defaults from Chinese borrowers on offshore bonds have jumped to a record.

Meanwhile, US Democrats stepped closer to an agreement on Biden’s multi-trillion dollar economic agenda. That could allow the House this week to pass a $550 billion infrastructure bill.

Crude oil was little changed around $84 a barrel as investors weighed the outlook for US stockpiles and prospects for talks that may eventually help to revive an Iranian nuclear accord, allowing a pickup in crude exports.

Gold held above $1 800 an ounce and Bitcoin traded around $62 800.

Here are some events to watch this week:

  • Earnings: Amazon, Apple, Microsoft, Twitter, Samsung Electronics, China Vanke, PetroChina, Ping An Insurance Group
  • Australia CPI, Wednesday
  • US wholesale inventories, US durable goods, Wednesday
  • Bank of Japan monetary policy decision, briefing, Thursday
  • ECB rates decision, President Christine Lagarde briefing, Thursday
  • US GDP, initial jobless claims, Thursday
  • G-20 joint finance and health ministers meeting ahead of the weekend leaders’ summit, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures climbed 0.3% as of 1:46 p.m. in Tokyo. The S&P 500 rose 0.5%
  • Nasdaq 100 futures rose 0.5%. The Nasdaq 100 rose 1%
  • Japan’s Topix index rose 1.2%
  • Australia’s S&P/ASX 200 Index was little changed
  • South Korea’s Kospi index gained 0.8%
  • Hong Kong’s Hang Seng Index shed 0.4%
  • China’s Shanghai Composite Index was up 0.1%
  • Euro Stoxx 50 futures were flat

Currencies

  • The Japanese yen was at 113.94 per dollar
  • The offshore yuan traded at 6.3817 per dollar
  • The Bloomberg Dollar Spot Index rose less than 0.05%
  • The euro was at $1.1600

Bonds

  • The yield on 10-year Treasuries rose one basis point to 1.64%
  • Australia’s 10-year bond yield rose three basis points to 1.81%

Commodities

  • West Texas Intermediate crude was at $83.87 a barrel, up 0.1%
  • Gold was at $1 802.28 an ounce, dropping 0.3%
© 2021 Bloomberg

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