Early Thursday, Asian equities were neutral as investors evaluated corporate earnings, rising inflation, and threats posed by China’s housing industry.
Japanese stocks fell slightly, while those in Australia and South Korea fluctuated. US futures fell following a choppy Wall Street session that saw the S&P 500 near a new high and the tech-heavy Nasdaq 100 fall. Tesla Inc. missed revenue predictions but exceeded profit projections in the third quarter, citing semiconductor and supply-chain problems.
In the long run Treasuries fell on a soft 20-year auction. The 10-year breakeven rate – a barometer for investors’ expectations for yearly inflation rates over the following decade – reached a record high.
The dollar remained weak, crude oil rose, and Bitcoin hovered around $66,000, having recently reached an all-time high. Traders will be watching the cash-strapped China Evergrande Group, which has halted talks to sell its property management division and requested that its shares resume trading.
Corporate results have helped to alleviate, but not quite eradicate, concerns that cost pressures – exacerbated by an energy shortage and supply-chain bottlenecks – will stall the epidemic recovery. Simultaneously, investors are concerned about the likelihood of decreasing central bank support and are leery of China’s real estate woes.
Governor Randal Quarles stated in recent Federal Reserve remarks that he favours a gradual reduction in monetary stimulus next month and is concerned about a broadening of inflationary pressures that could necessitate a policy response.
On Bloomberg Television, David Kudla, chief executive officer of Mainstay Capital Management, stated that the Fed is “stuck in a very difficult scenario.” This is due to the possibility of less stimulus followed by rate hikes in the face of a major slowdown in economic growth, he explained.
Meanwhile, the United States Food and Drug Administration approved booster shots for Moderna Inc. and Johnson & Johnson Covid-19. Russia is one of several countries tightening virus restrictions in an effort to rein in rising infection rates.
Published by Zack Baharum