Stocks, Futures Fall, Bonds Rise on Growth Concern: Markets Wrap

(Bloomberg) — Asian stocks fell along with U.S. futures Thursday and bonds rose on fears China’s economic rebound may be peaking. Traders also mulled minutes signaling the Federal Reserve is edging toward tapering stimulus.

Shares retreated in Hong Kong and China, where a crackdown on technology firms has hurt sentiment. Chinese officials also hinted the central bank could make more liquidity available to bolster growth. Another virus state of emergency looms for Tokyo, leaving Japan’s market under pressure. U.S. and European equity futures dipped after the S&P 500 and Nasdaq 100 hit records.

Ten-year U.S. Treasury yields steadied around 1.30% after falling for seven trading days as inflation expectations ease. The Fed minutes indicated officials weren’t ready to communicate a schedule for scaling back their bond-buying program, due to high uncertainty over the course of the recovery. They did, however, want to establish a plan in case a move is needed sooner.

Sovereign yields fell in Australia and New Zealand. The dollar and yen firmed on haven demand. Oil declined as investors await further signals from the OPEC alliance on production plans after a breakdown in talks.

Central bank stimulus plans remain critical to the market outlook, especially the fate of the Fed’s $120 billion in monthly bond purchases. In Europe, policy makers agreed to raise their inflation goal to 2% and allow room for an overshoot when needed, according to officials familiar with the matter. That could give more scope for sustaining ultra-loose policy for longer.

“We are taking a breather and reassessing where the interest rate trajectory is,” Jun Bei Liu, portfolio manager at Tribeca Investment Partners, said on Bloomberg Television. “The actual recovery path is never going to be straight. Caution is definitely settling in and the focus is on which economy will come out of this first.”

Covid-19 trends are also causing jitters. The pandemic’s global death toll has surpassed 4 million as the delta variant spreads, and the World Health Organization urged caution on reopenings worldwide.

Elsewhere, Malaysian stocks dropped, leaving the benchmark on track to enter a correction amid political turmoil.

For more market commentary, follow the MLIV blog.

Here are some events to watch this week:

The Group of 20 finance ministers and central bankers meet in Venice on FridayChina PPI and CPI data released on Friday

These are some of the main moves in markets:

Stocks

S&P 500 futures fell 0.3% as of 7 a.m. in London. The S&P 500 rose 0.3%Nasdaq 100 futures slipped 0.2%. The Nasdaq 100 rose 0.2%Japan’s Topix index fell 0.9%Australia’s S&P/ASX 200 index rose 0.2%South Korea’s Kospi index shed 0.8%Hong Kong’s Hang Seng Index fell 2.5%China’s Shanghai Composite index declined 0.8%Euro Stoxx 50 futures dipped 0.2%

Currencies

The Japanese yen was at 110.26 per dollar, up 0.4%The offshore yuan was at 6.4806 per dollarThe Bloomberg Dollar Spot Index was steadyThe euro traded at $1.1806

Bonds

The yield on 10-year Treasuries dipped one basis point to 1.30%Australia’s 10-year bond yield fell about five basis points to 1.34%

Commodities

West Texas Intermediate crude retreated 0.3% to $72 a barrelGold was at $1,797.65 an ounce, down 0.3%

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