US futures, stocks rise as China eases quarantine: markets wrap

Gold was at $1 827.87 an ounce, up 0.3%.
Image: Paul Yeung/Bloomberg

US equity futures and Asian stocks turned higher Tuesday on signs that China is moving toward less strict Covid protocols.

An Asian equity index erased losses to climb for a fourth session as bourses from Japan to mainland China to Australia advanced. S&P 500 and Nasdaq 100 contracts added about 0.5%.

China cut its mandatory quarantine period to 10 days from three weeks for inbound visitors. That comes after cities such as Shanghai and Beijing damped virus outbreaks and loosened mobility restrictions.

Treasuries pared gains, leaving the 10-year yield around 3.19%. Crude rose past $111 a barrel, a dollar gauge declined and commodity-linked currencies strengthened.

Still, rallies in risk assets have proved fleeting this year as higher borrowing costs to fight inflation restrain economic activity in a range of nations. Some analysts argue still-bullish earnings estimates are next in line for a reality check.

Earnings revisions are a risk with the US economy set to slow next year, though China emerging from Covid strictures could act as a global buffer, according to Lorraine Tan, Morningstar director of equity research.

“You got a US slowdown in 2023 in terms of growth, but you have China hopefully coming out of its lockdowns,” Tan said on Bloomberg Radio.

The People’s Bank of China pledged to keep monetary policy supportive to help the nation’s economy. It signaled that stimulus would likely focus on boosting credit rather than lowering interest rates.

In the Bavarian Alps, Russia’s war in Ukraine and limiting its profits from rising energy prices have been among the main topics of discussion at a Group of Seven summit.

G-7 leaders are set to instruct ministers to explore implementing a price cap on Russian gas. The leaders are also expected to mention a mechanism to cap prices on Russian oil in the final communique.

What to watch this week:

  • San Francisco Fed President Mary Daly is interviewed by LinkedIn’s chief economist, Tuesday
  • US GDP, Wednesday
  • ECB President Christine Lagarde, Federal Reserve Chair Jerome Powell, BOE Governor Andrew Bailey and Cleveland Fed President Loretta Mester due to speak at ECB event, Wednesday
  • St. Louis Fed President James Bullard speaks, Wednesday
  • China PMI, Thursday
  • US personal income, PCE deflator, initial jobless claims, Thursday
  • Eurozone CPI, Friday
  • US construction spending, ISM Manufacturing, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.5% of 7:27 a.m. in London. The S&P 500 fell 0.3%
  • Nasdaq 100 futures rose 0.6%. The Nasdaq 100 fell 0.8%
  • The MSCI Asia-Pacific Index climbed 0.5%
  • Euro Stoxx 50 futures rose 0.3%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%
  • The euro was at $1.0582
  • The Japanese yen traded at 135.46 per dollar
  • The offshore yuan was at 6.6858 per dollar

Bonds

  • The yield on 10-year Treasuries fell one basis point to 3.19%

Commodities

  • West Texas Intermediate crude rose 1.4% to $111.13 a barrel
  • Gold was at $1 827.87 an ounce, up 0.3%
© 2022 Bloomberg

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