Stocks, Bond Yields Rise as Traders Weigh Recovery: Markets Wrap

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(Bloomberg) — An Asia-Pacific stock gauge rose for a second day Wednesday, tracking a U.S. climb as corporate earnings helped to improve investor sentiment. Treasury yields advanced and the dollar dipped.

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A rally in Chinese technology firms such as Alibaba Group Holding Ltd. bolstered Hong Kong shares on hopes the worst of Beijing’s regulatory crackdown is over. Equities fluctuated in China, where the central bank boosted short-term liquidity, held loan prime rates steady and set a weaker-than-expected yuan reference rate in a sign of discomfort over currency strength.

U.S. and European futures were little changed. The S&P 500 closed near a record as traders weighed the corporate impact of supply-chain snarls and higher commodity prices. Johnson & Johnson raised a profit forecast, Netflix Inc. subscribers jumped and Procter & Gamble Co. faced rising costs.

The 10-year U.S. Treasury yield pushed further above 1.60% and Australian debt of a similar tenor slid. Bitcoin is close to hitting a record on optimism following the debut of the first Bitcoin-linked exchange-traded fund listed in the U.S. Oil slipped from a seven-year high.

The earnings season has taken some of the spotlight away from concerns about a slowing pandemic recovery, price pressures stoked by energy costs and reduced central bank support. The Cboe Volatility Index, a measure of implied equity swings for the S&P 500, has fallen back to the lowest level since August.

In the latest Fed comments, Governor Christopher Waller said the central bank should begin tapering its bond-buying program next month. He expects inflation to moderate and said interest-rate hikes are probably “still some time off.”

“I don’t think the Fed is going to act or hike very aggressively in part because they have this inflation view, but also because we are going to be in a slowing growth environment by the end of next year,” Esty Dwek, FlowBank SA chief investment officer, said on Bloomberg Television.

Meanwhile, progress on President Joe Biden’s economic agenda appears closer, after Congressional Democrats made headway in breaking a stalemate on the multitrillion-dollar tax and spending package.

Traders continue to monitor the debt woes at China’s real-estate developers. Sinic Holdings Group Co. became the latest to default, while the wait continues for China Evergrande Group’s overdue interest payments on dollar bonds. A property slump saw China’s home prices fall for the first time in six years.

For more market analysis, read our MLIV blog.

Events to watch this week:

  • Earnings roll in, including from AT&T Inc., Barclays Plc and Tesla Inc.

  • EIA crude oil inventory report, Wednesday

  • China property prices, loan prime rates, Wednesday

  • U.S. Conference Board leading index, U.S. existing home sales, jobless claims, Thursday

  • Fed Chair Jerome Powell takes part in policy panel discussion, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures were little changed as of 1:30 p.m. in Tokyo. The S&P 500 rose 0.7%

  • Nasdaq 100 futures dipped 0.1%. The Nasdaq 100 rose 0.7%

  • Japan’s Topix index rose 0.2%

  • Australia’s S&P/ASX 200 Index added 0.6%

  • South Korea’s Kospi index fell 0.2%

  • Hong Kong’s Hang Seng Index gained 1.3%

  • China’s Shanghai Composite Index was steady

  • Euro Stoxx 50 futures slipped 0.1%

Currencies

  • The Japanese yen was at 114.51 per dollar, down 0.1%

  • The offshore yuan was at 6.3840 per dollar, down 0.1%

  • The Bloomberg Dollar Spot Index dipped 0.1%

  • The euro traded at $1.1648

Bonds

Commodities

  • West Texas Intermediate crude was at $82.46 a barrel, down 0.6%

  • Gold was at $1,773.60 an ounce, up 0.3%

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