US and European equity futures dipped and Asian stocks were mixed Monday amid investor caution at the start of the week even as data indicated China’s economic recovery remains on track. The dollar nudged up.
South Korean shares retreated as sentiment toward chip component makers took a hit on news the Trump administration will restrict licenses to several Huawei Technologies Co. suppliers. Hong Kong and Chinese stocks gained after growth and industrial output data beat expectations. S&P 500 futures pointed lower with European contracts. Crude oil slipped.
Cash Treasuries aren’t trading due to the Martin Luther King Jr. holiday, though US bond futures advanced. The S&P 500 closed lower Friday and support for Treasuries pushed the yield on 10-year notes down to around 1.08%.
Global shares slipped last week after optimism about the $1.9 trillion US aid package, and the so-called reflation trade, faltered into a holiday weekend. Investors are waiting for the inauguration of Joe Biden, who ascends to the US presidency on Wednesday with a speech outlining how he’ll tackle the health and economic crises he inherits.
“Markets needed a breather or even a pull back to justify reflationary expectations,” said Ben Emons, managing director of global macro strategy at Medley Global Advisors.
Meanwhile, Janet Yellen is expected to affirm the US’s commitment to market-determined exchange rates and provide assurances that the US won’t seek a weaker currency for competitive trade advantages, the Wall Street Journal reported, citing Biden transition officials familiar with preparation for her confirmation hearing as Treasury Secretary.
US-China tension continues to bubble in the last days of Donald Trump’s presidency. The US notified several Huawei suppliers that it’s revoking their licenses to work with the Chinese firm and rejecting other applications, Reuters reported, citing unidentified people familiar with the matter.
On the coronavirus front, cases topped 95 million, while the US death toll from Covid-19 neared 400,000. Norway expressed increasing concern about the safety of the Pfizer Inc. vaccine on elderly people with serious underlying health conditions after deaths in 29 people who received inoculations.
These are some key events coming up in the week ahead:
- US equity and bond markets are shut Monday for the Martin Luther King Jr. holiday.
- Earnings come from companies including Bank of America, Morgan Stanley, Procter & Gamble, Intel, and Netflix.
- Joe Biden takes office as US president on Wednesday.
- Policy decisions are due Wednesday from central banks in Brazil, Malaysia and Canada. The Bank of Japan and the ECB deliver decisions Thursday.
Here are the main moves in markets:
- S&P 500 futures slid 0.2% as of 6:57 a.m. in London. The index fell 0.7% on Friday.
- Japan’s Topix index declined 0.6%.
- Hong Kong’s Hang Seng rose 0.8%.
- South Korea’s Kospi lost 2.3%.
- Shanghai Composite rose 0.9%.
- Euro Stoxx 50 futures lost 0.3%.
- The yen was at 103.73 per dollar, up 0.1%.
- The Bloomberg Dollar Spot Index climbed 0.1%.
- The euro bought $1.2078.
- The offshore yuan traded at 6.4916 per dollar, down 0.1%.
- The yield on 10-year Treasuries ended last week at 1.08%.
- West Texas Intermediate crude slid 0.3% to $52.21 a barrel.
- Gold added 0.6% to $1,839 an ounce.