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Stocks rise, futures steady as China concerns ease: markets wrap

The delta strain is exacerbating concerns that the rebound from the pandemic is losing steam.
Image: Kiyoshi Ota/Bloomberg

Asian stocks rose Wednesday and US futures were steady as concerns over China’s technology clampdown eased a little and company earnings helped counter worries about the delta strain of Covid-19.

Hong Kong rallied after Chinese state media tempered an attack on gaming companies, bolstering Tencent. Shares slipped in Japan, where SoftBank Group Corp. retreated on a potential block of its $40 billion sale of Arm Ltd. to chip company Nvidia Corp. US equity contracts were steady in the wake of a record S&P 500 close on robust earnings. European futures rose.

Investors continue to assess regulatory risks in China as Beijing pushes on with a crackdown on technology giants. Alibaba’s revenue missed estimates for the first time in over two years, a sign of the clampdown’s toll.

The 10-year US Treasury yield held its retreat, while Japan’s 10-year yield fell to zero for the first time since December. Oil weakened toward $70 a barrel. The delta strain is exacerbating concerns that the rebound from the pandemic is losing steam.

Solid earnings have propelled US and European shares to all-time highs, weathering the spread of the more contagious Covid-19 variant as well as a burst of inflation attributed to pandemic-linked bottlenecks. In comparison, the mood in Asia is more somber amid China’s regulatory broadsides and lagging vaccination rates that are delaying economic reopening across the region.

“We think the delta variant is not going to stop the recovery, it’s just going to delay it,” Laila Pence, Pence Wealth Management president, said on Bloomberg Television. “The Federal Reserve is going to live with a lot more inflation. They don’t want to derail the recovery.”

The delta variant has pushed the threshold for herd immunity to well over 80% and potentially approaching 90%, according to an Infectious Diseases Society of America briefing. Meanwhile, analysts are reviewing economic growth projections for China as officials there grapple with the broadest Covid-19 outbreak since the beginning of the pandemic.

In New Zealand, jobs data strengthened rate-hike bets, bolstering its currency and sapping the 10-year bond.

Key US jobs data due later this week could stoke market swings if they lead investors to adjust expectations over the Federal Reserve’s likely timeline for eventually tapering stimulus. Fed Vice Chair Richard Clarida is due to speak about monetary policy Wednesday.

Here are some key events to watch this week:

  • Treasury quarterly refunding announcement is expected Wednesday
  • Federal Reserve Vice Chair Richard Clarida due to speak Wednesday
  • Bank of England is expected to keep its benchmark interest rate and its bond-buying target unchanged Thursday
  • Reserve Bank of India monetary policy decision, briefing Friday
  • The US jobs report is expected to show another robust month of hiring Friday

Stocks

  • S&P 500 futures were flat as of 7:11 a.m. in London. The S&P 500 rose 0.8%
  • Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 0.7%
  • Japan’s Topix index fell 0.5%
  • Australia’s S&P/ASX 200 Index added 0.4%
  • South Korea’s Kospi index rose 1.3%
  • Hong Kong’s Hang Seng Index rose 1.1%
  • China’s Shanghai Composite index increased 0.8%
  • Euro Stoxx 50 futures rose 0.4%

Currencies

  • The yen traded at 109.09 per dollar
  • The offshore yuan rose 0.1% to 6.4582 per dollar
  • The Bloomberg Dollar Spot Index slipped 0.1%
  • The euro was little changed at $1.1872

Bonds

  • The yield on 10-year Treasuries held at about 1.17%
  • Australia’s 10-year bond yield fell about one basis point to 1.15%

Commodities

  • West Texas Intermediate crude fell 0.3% to $70.37 a barrel
  • Gold was at $1 812.47 an ounce, up 0.1%
© 2021 Bloomberg

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