Stocks steady after US futures rise; bonds slip: markets wrap

Stocks and futures showed a degree of stabilisation in Asia Monday with investors weighing the latest on the omicron variant and the regulatory outlook for Chinese technology companies. Treasuries pared some of Friday’s rally.

US futures pushed higher while benchmarks saw modest declines in Japan and Australia. In Hong Kong, an index of Chinese tech stocks retreated for a third day. Mainland China shares rose and the nation’s government bond rallied amid bets the central bank will soon ease monetary policy to aid growth.

China’s securities watchdog on Sunday tried to play down fears over Chinese companies’ withdrawal from American exchanges. Didi Global Inc.’s plans to switch its listing to Hong Kong from New York sent the nation’s shares in the US tumbling and sparked fears others might follow.

Treasury yields rose, trimming Friday’s plunge that sent the 10-year yield closer to 1.30%. Attention turns to US consumer prices which are expected to show the largest annual advance in decades, keeping pressure on the Federal Reserve to deliver swifter policy tightening.

Markets are being buffeted by headwinds such as Fed Chair Jerome Powell’s hawkish pivot to tackle elevated inflation. That assessment is unlikely to change after US jobs had the smallest gain this year. Uncertainty about omicron is another headache for investors as are developments at China’s indebted developers.

“We expect the risk off sentiment to continue to ripple through the markets,” Jun Bei Liu, portfolio manager at Tribeca Investment Partners, said on Bloomberg Television. However, “this is something that we will shrug off soon. The market has done very well so far this calendar year, people are taking some money off the table. Ultimately interest rates will go up, but not as quickly as we think,” and investors will look past omicron, she said.

While markets are jittery about omicron, South Africa reported that the variant is not fueling a surge in hospitalizations, and US medical adviser Anthony Fauci said there didn’t seem to be “a great degree of severity to omicron,” while cautioning it’s too early to be certain. Moderna Inc.’s president said there’s a “real risk” that existing vaccines will be less effective against omicron.

Elsewhere, gold held an advance and oil rose after Saudi Arabia boosted the prices of its crude. Cryptocurrencies got swept up in the risk-off wave, with Bitcoin plunging on Saturday and currently sitting below $50 000.

Here are some key events to watch this week:

• Reserve Bank of Australia policy decision Tuesday
• Euro zone GDP Tuesday
• Reserve Bank of India rate decision Wednesday
• Olaf Scholz set to replace Angela Merkel as chancellor Wednesday
• European Central Bank President Christine Lagarde speaks at a conference Wednesday
• Federal Reserve Bank of Minneapolis President Neel Kashkari speaks Thursday
• Reserve Bank of Australia Governor Philip Lowe speaks Thursday
• China CPI, PPI, money supply, new yuan loans, aggregate financing Thursday
• US CPI Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.5% as of 2:14 p.m. in Tokyo. The S&P 500 fell 0.8% on Friday
• Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 1.7% on Friday
• Topix index fell 0.4%
• Australia’s S&P/ASX 200 Index lost 0.2%
• Hang Seng Index fell 1.3%
• Shanghai Composite Index rose 0.4%
• Euro Stoxx 50 futures rose 1.2%

Currencies

• The Japanese yen was at 113.05 per dollar, down 0.2%
• The offshore yuan was at 6.3701 per dollar
• The Bloomberg Dollar Spot Index edged up 0.1%
• The euro was at $1.1287

Bonds

• The yield on 10-year Treasuries rose about five basis points to 1.39%
• Australia’s 10-year bond yield dropped two basis points to 1.59%

Commodities

• West Texas Intermediate crude rose 2.3% to $67.80 a barrel
• Gold was at $1 781.78 an ounce