Stocks up amid China step to ease US audit spat: markets wrap

Stocks rose Monday amid a rally in Hong Kong spurred by China’s move to ease a dispute with the US over audits. Treasuries fell on the prospect of sharp Federal Reserve interest-rate hikes to fight inflation.

Chinese tech shares in Hong Kong climbed over 4% after Beijing sought to modify a rule that restricts offshore-listed firms from sharing sensitive financial data with foreign regulators. That may allow the US to gain full access to audits, reducing the risk of Chinese firms losing Wall Street listings.

US and European futures edged up as traders monitored Russia’s war in Ukraine. The two sides may resume video talks Monday. Some European governments are pushing for stiffer sanctions on Russia amid reports that its troops executed unarmed civilians in Ukrainian towns.

Oil steadied at about $100 a barrel as traders weighed threats to demand from China’s Covid outbreak and moves to tap strategic reserves to enhance supply and curb elevated energy costs.

The Treasury yield curve is flashing more warnings that economic growth will slow as the Fed raises rates to tame inflation stoked in part by commodities. The two-year US yield has exceeded the 30-year for the first time since 2007, joining inversions on other parts of the curve.

The Fed minutes later this week will shape views on the odds of a half percentage-point rate increase in May and provide key details on how the central bank will shrink its balance sheet.

“It would not be surprising to see yields rise further from here and it is very hard to know where they will land,” Angela Ashton, founder and director of investment consulting firm Evergreen Consultants, wrote in a note. “Markets are volatile and there is every chance they will overshoot.”

New York Fed President John Williams said Saturday a “sequence of steps” can get rates back to more normal levels. Mary Daly, president of the San Francisco Fed, said in an interview published Sunday that rising inflation and a tight labor market strengthen the case for a half-point May hike.

A strong jobs report Friday bolstered the case for the Fed to push up borrowing costs. The US added 431 000 jobs in March while the unemployment rate fell to 3.6%, near its pre-pandemic low.

In China, where markets are closed for a holiday, most of Shanghai’s 25 million residents are under some form of Covid lockdown. State media also reported a new subtype of the omicron variant.

Key events to watch this week:

• Reserve Bank of Australia rate decision, Tuesday
• Fed Governor Lael Brainard speaks, Tuesday
• Federal Reserve minutes, Wednesday
• China Caixin composite and services PMI, Wednesday
• EIA crude oil inventory report, Wednesday
• Philadelphia Fed President Patrick Harker speaks, Wednesday
• St. Louis Fed’s James Bullard, Atlanta Fed’s Raphael Bostic, Chicago Fed’s Charles Evans speak at separate events, Thursday
• Reserve Bank of India rate decision, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 7:18 a.m. in London. The S&P 500 rose 0.3%
• Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 0.2%
• Japan’s Topix index increased 0.5%
• Australia’s S&P/ASX 200 Index rose 0.3%
• South Korea’s Kospi index added 0.7%
• Hong Kong’s Hang Seng Index rose 1.9%
• Euro Stoxx 50 futures climbed 0.4%

Currencies

• The Japanese yen was at 122.72 per dollar, down 0.2%
• The offshore yuan was at 6.3722 per dollar
• The Bloomberg Dollar Spot Index was steady
• The euro was at $1.1042

Bonds

• The yield on 10-year Treasuries advanced about three basis points to 2.42%
• Australia’s 10-year bond yield rose one basis point to 2.84%

Commodities

• West Texas Intermediate crude was at $100.30 a barrel, up 1%
• Gold was at $1 919.79 an ounce, down 0.3%