Stocks dip, treasuries edge up in cautious trading: markets wrap

Gold was at $1 806.84 an ounce.
Image: Getty Images/Barcroft Media

Stocks dipped Wednesday and Treasuries edged up as investors assessed the economic implications of the omicron coronavirus outbreak.

Shares slipped in Japan, technology stocks drove a retreat in Hong Kong and China slid. US futures fluctuated after the S&P 500 and the Nasdaq 100 weakened Tuesday, snapping four sessions of gains. Volumes remained thin into the end of the year in some markets.

Sentiment in China is being sapped by Beijing’s tightening oversight of overseas share sales and economic risks from a property slowdown. Authorities are expected to add stimulus next year to steady expansion.

A key gauge of interbank funding costs in China fell to the lowest level since January after the nation’s central bank added more cash to the financial system to ease a seasonal surge in liquidity demand.

US Treasury yields edged lower and the dollar was little changed. Crude oil held near a one-month high partly on bets that the global recovery can ride out omicron. Bitcoin was around $48 000 after a tumble that hinted at diminished ardor for the most speculative assets.

Investors are rounding out the year by booking some profits after a 17% jump in global equities. The coronavirus, Federal Reserve policy tightening and China’s outlook are among the key risks for 2022. Omicron fears are easing on growing evidence that the fast-spreading strain leads to milder symptoms.

“We are pretty constructive going into 2022,” Katie Nixon, chief investment officer for Northern Trust Wealth Management, said on Bloomberg Television. “We’re having fits and starts related to this omicron variant of course. This will create maybe demand delayed but not destroyed.”

On China, Nixon said much stronger policy action is needed in 2022 to bolster growth and help reignite interest in emerging-market equities, which otherwise will remain one of the big uncertainties for investors.

In the latest US data, the Richmond Fed’s manufacturing survey rose in December, beating estimates. Growth in US home prices cooled modestly in October after soaring during the pandemic.

“We’re sober about potential headwinds that still could be coming, even the rest of this year, but early in 2022 — the Fed is going to be raising rates, that will change things for the markets,” Ann Miletti, head of active equity at Allspring Global Investments, said on Bloomberg Television. “We are also hopeful because as you look at a lot of the economic data, it remains strong.”

Elsewhere, Elon Musk continued to offload Tesla Inc. stock, selling just over $1 billion of shares.

What to watch this week:

  • US initial jobless claims, Thursday

Some of the main moves in markets:

Stocks

  • S&P 500 futures were steady as of 1:50 p.m. in Tokyo. The S&P 500 fell 0.1%
  • Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 0.5%
  • Japan’s Topix index shed 0.5%
  • Australia’s S&P/ASX 200 Index rose 1.3%
  • South Korea’s Kospi index fell 1%
  • Hong Kong’s Hang Seng Index lost 0.9%
  • China’s Shanghai Composite Index fell 0.8%
  • Euro Stoxx 50 futures increased 0.3%

Currencies

  • The Japanese yen was little changed at 114.83 per dollar
  • The offshore yuan was at 6.3732 per dollar
  • The Bloomberg Dollar Spot Index was flat
  • The euro was at $1.1304

Bonds

  • The yield on 10-year Treasuries fell one basis point to 1.47%
  • Australia’s 10-year bond yield fell about three basis points to 1.54%

Commodities

  • West Texas Intermediate crude was at $76 a barrel
  • Gold was at $1 806.84 an ounce
© 2021 Bloomberg

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