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Stocks mixed, futures fall as CPI, earnings loom: markets wrap

A gauge of the dollar ticked lower.
Image: Bloomberg

Asian stocks were mixed Wednesday as traders weighed the impact of elevated inflation on the economic recovery and looked ahead to earnings reports. A gauge of the dollar ticked lower.

Shares in Japan posted modest losses, while South Korea outperformed amid a strong jobs report. S&P 500 and Nasdaq 100 futures dipped as investors wait to see whether the corporate profit outlook will boost sentiment. Apple Inc. slipped on a likely cut in iPhone 13 production targets for 2021 due to chip shortages, putting the focus on pandemic-related supply-chain snarls.

The US 10-year Treasury yield held below 1.60%. Markets are bracing for a US CPI report that is expected to show elevated inflation. A rally in oil paused but crude remained around $80 a barrel amid a global energy crunch. Chinese thermal coal futures hit another record high.

Traders continue to monitor the debt woes of China Evergrande Group. Standard Chartered Plc Chief Executive Officer Bill Winters said Beijing won’t allow the turbulence surrounding the property developer to turn into a systemic crisis. But there remains little clarity on what officials might do next. In Hong Kong, trading was canceled because of a storm.

The upcoming flurry of corporate earnings releases will provide a window on whether businesses expect price pressures to crimp profit margins. A backdrop of slowing economic growth and jumping costs, just as key central banks prepare to pare stimulus, is causing investor jitters.

“Some of these topics like inflation, the 10-year, the Covid variant, the future of corporate taxes, of course they are going to weigh on the market, but I still think that we are in an economic recovery,” Sylvia Jablonski, Defiance ETFs chief investment officer and co-founder, said on Bloomberg Television.

Federal Reserve Bank of Atlanta President Raphael Bostic said the inflation surge is lasting longer than expected, so it’s not appropriate to refer to such a rise as transitory. Vice Chair Richard Clarida noted that the conditions required to begin tapering the Fed’s bond-buying program have “all but been met.”

The International Monetary Fund warned of the risk of sudden and steep declines in global equity prices and home values as global central banks withdraw the support they’ve provided during the pandemic.

Meanwhile, China’s exports in yuan terms grew at a faster pace in September than the previous month, according to Bloomberg calculations, despite a nationwide power crunch that forced businesses to cut production.

In cryptocurrencies, Bitcoin pared its recent rally and traded around $56,300.

Here are a few events to watch this week:

  • US FOMC minutes and CPI Wednesday
  • China PPI, CPI Thursday
  • US initial jobless claims, PPI Thursday

Stocks

  • S&P 500 futures fell 0.1% as of 1:05 p.m in Tokyo. The S&P 500 fell 0.2%
  • Nasdaq 100 futures fell 0.2%. The Nasdaq 100 fell 0.4%
  • Japan’s Topix index shed 0.3%
  • Australia’s S&P/ASX 200 Index was little changed
  • South Korea’s Kospi index added 1%
  • China’s Shanghai Composite Index fell 0.4%
  • Euro Stoxx 50 futures rose 0.1%

Currencies

  • The Japanese yen was at 113.46 per dollar
  • The offshore yuan traded at 6.4480 per dollar
  • The Bloomberg Dollar Spot Index fell 0.1%
  • The euro traded at $1.1552

Bonds

  • The yield on 10-year Treasuries was at 1.58%
  • Australia’s 10-year bond yield fell about four basis points to 1.69%

Commodities

  • West Texas Intermediate crude was at $80.42 a barrel, down 0.3%
  • Gold was at $1 762.09 an ounce, up 0.1%
© 2021 Bloomberg

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