Stocks rise with futures; China’s yuan ticks up: markets wrap

Stocks in Asia rose Friday with US and European equity futures as investors weighed the chances of a new American stimulus package against an uptick in global coronavirus cases. The offshore yuan climbed on optimism about inflows into Chinese assets.

Banks helped Australian equities outperform as the government moved to ease lending laws, while shares in Japan, Hong Kong and South Korea were also higher. S&P 500 contracts climbed after a volatile session on Thursday whipsawed by shifting views about the likelihood of fresh government aid. The US gauge pared most of its advance as earlier optimism faded. The Democrats are crafting a new $2.4 trillion stimulus bill to try to break the deadlock with Republicans. Treasuries and the dollar were little changed.

The yuan was higher after FTSE Russell said China’s debt would be added to its flagship World Government Bond Index. China Evergrande bonds were halted Friday after plunging and stock trading was volatile. The world’s most indebted developer warned officials it faces a potential default that could roil the nation’s financial system if it doesn’t get approval for a stock exchange listing. Crude oil was steady.

“The odds of Phase 4 stimulus are a close call,” wrote Aneta Markowska, chief economist at Jefferies LLC in New York. “While still possible, there is a high risk that it does not happen this year. Without it, we would expect the economy to hit a major speed bump in Q4.”

The risk of a slowdown in the economic recovery has risen with the lack of another stimulus package, prompting Goldman Sachs Group Inc. economists to cut their forecast for US growth in the fourth quarter. Federal Reserve Chairman Jerome Powell reiterated that “it’s likely that additional fiscal support will be needed,” while Fed Bank of St. Louis President James Bullard said the economy may be close to a “full recovery” by year-end.

Meanwhile, Europe has reemerged as a hot spot for Covid-19. The UK reported the highest number of new cases in a single day since the start of the pandemic, while France’s new infections jumped to a record.

Republican lawmakers vowed that the presidential transition after November’s election will occur without disruption, in a rebuke to President Donald Trump’s refusal to commit to a peaceful transfer of power. Goldman economists said markets are probably overestimating the chances of a delay in the results of the vote.

These are some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.5% as of 11:53 a.m. Tokyo time. The S&P 500 advanced 0.3% on Thursday.
• Japan’s Topix index rose 0.5%.
• Hong Kong’s Hang Seng index added 0.3%.
• Shanghai Composite was little changed.
• South Korea’s Kospi index gained 0.6%.
• Australia’s S&P/ASX 200 Index added 1.3%.
• Euro Stoxx 50 futures rose 0.6%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro bought $1.1668.
• The yen was little changed at 105.47 per dollar.
• The offshore yuan was at 6.8193 per dollar, up 0.1%.

Bonds

• The yield on 10-year Treasuries remained at 0.67%.

Commodities

• West Texas Intermediate crude rose 0.4% to $40.46 a barrel.
• Gold was steady at $1,867.89 an ounce.