Asian Stocks Set for Steady Start; Treasuries Slip: Markets Wrap

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Asian stocks looked set for a steady open Friday as traders weighed risks from China to the global recovery. Treasury yields and the dollar rose following surprise strength in U.S. retail sales.

Futures edged up in Japan and Hong Kong but dipped in Australia, while U.S. contracts slipped in early Asian trading. U.S. stocks closed mostly lower after swinging between gains and losses ahead of Friday’s quarterly expiration of options and futures, which can trigger volatility.

U.S. retail sales rose unexpectedly in August, easing some of the worries over the impact of the delta variant and highlighting the case for the Federal Reserve to begin paring stimulus. Jobless claims increased, likely reflecting volatility in weekly data as the labor market broadly recovers.

Traders are monitoring the debt crisis at developer China Evergrande Group for signs of wider contagion in the world’s second-largest economy. Beijing’s regulatory crackdown spanning technology to gambling again hurt a gauge of U.S.-listed Chinese shares as well as casino operators with exposure to Macau.

Bloomberg commodity gauge is in sight of the record level hit in 2011

Global equities are on course for a second weekly drop, subdued by the impact of the delta strain on economic reopening, the implications of elevated inflation and the upheavals in China. The Fed’s policy meeting next week is another possible source of volatility as traders await more clues about the time-line for paring bond purchases and eventually hiking interest rates.

“After seven months of gains, equity markets have been choppier mid-way through September,” said Keith Lerner, chief market strategist at Truist Advisory Services. “This is actually quite normal from a historical seasonal standpoint, though the ongoing carousel of concerns continues.”

Oil was steady, while base metals were hampered by the risks facing China’s property sector from Evergrande’s woes. Gold and silver held declines. An index of commodity prices slipped but remains in sight of a record level hit in 2011, underscoring the inflation concerns rippling through the world economy.

Meanwhile, the European Central Bank rejected the accuracy of a Financial Times report on the euro-area’s interest-rate outlook. Bund futures had dropped on the article, which said the ECB could hit its 2% inflation target by 2025 based on unpublished internal models that raised the prospect of earlier than-expected rate hikes.

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.1% as of 7:20 a.m. in Tokyo. The S&P 500 fell 0.2%
  • Nasdaq 100 futures retreated 0.1%. The Nasdaq 100 rose 0.1%
  • Nikkei 225 futures rose 0.2%
  • S&P/ASX 200 futures fell 0.2%
  • Hang Seng futures rose 0.3%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.4%
  • The euro was at $1.1767
  • The offshore yuan was at 6.4535 per dollar
  • The Japanese yen was at 109.72 per dollar

Bonds

  • The yield on 10-year Treasuries advanced four basis points to 1.34%

Commodities

  • West Texas Intermediate crude was at $72.66 a barrel, up 0.1%
  • Gold was at $1,752.90 an ounce, down 0.1%
Source Bloomberg

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