Most Asian Stocks Dip, Futures Waver as Fed Looms: Markets Wrap
Most Asian stocks fell Wednesday and U.S. equity futures wavered as traders braced for a faster withdrawal of Federal Reserve stimulus and evaluated omicron risks as well as signs of slowing Chinese growth.
MSCI Inc.’s Asia-Pacific share gauge slipped for a fourth session, with China and Hong Kong in the red. Chinese data ranging from new home prices to investment and retail sales suggested slowing growth amid a deepening property market slump and Covid disruptions.
U.S.-China tension also continues to bubble: the Biden administration is considering imposing tougher sanctions on Semiconductor Manufacturing International Corp., China’s largest chipmaker. The Financial Times reported the U.S. will add eight more Chinese companies to an investment blacklist.
S&P 500, Nasdaq 100 and European futures fluctuated. Treasury yields and the dollar dipped. Technology shares led a Wall Street drop Tuesday as investors soured on more richly valued stocks ahead of the Fed policy decision.
The Fed on Wednesday is set to unveil a quicker tapering of bond purchases, paving the way for interest-rate hikes next year as high inflation rattles the American economy. The mix of intense price pressures -- U.S. producer-price inflation hit a record of almost 10% -- diminishing central bank support and omicron uncertainty is testing markets.
“We expect the markets to be volatile primarily because of the back and forth on the Covid news” and “worries again about inflation,” Rebecca Felton, RiverFront Investment Group senior market strategist, said on Bloomberg Television. “High valuations and uneven data are probably what we are going to see for the next couple of months.”
Elsewhere, oil fell for a third day. The International Energy Agency said the global market had already returned to surplus. Moreover, mobility curbs to tackle omicron risk hurting demand.
In China, Sinovac Biotech Ltd. said that its initial lab studies showed that 94% of people who received three doses of its vaccine had sufficient neutralizing antibodies against omicron.
That statement came after another study indicated the Sinovac shot -- one of the most widely used in the world -- doesn’t provide sufficient antibodies to neutralize the variant.
Meanwhile, a bill to raise the U.S. debt ceiling by $2.5 trillion headed to President Joe Biden for his signature after being cleared by lawmakers.
Here are some key events this week:
- China releases November industrial output, retail sales data, Wednesday.
- Fed rate decision, Wednesday.
- U.S. business inventories, retail sales, empire manufacturing, Wednesday.
- BOE rate decision, Thursday.
- ECB rate decision, Thursday.
- U.S. housing starts, initial jobless claims, industrial production, Thursday.
- BOJ monetary policy decision, Friday.
- S&P Dow Jones Indices quarterly rebalance effective after markets close, Friday.
- “Quadruple witching” day in the U.S. market, when options and futures on indexes and equities expire, Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- S&P 500 futures were flat as of of 6:52 a.m. in London. The S&P 500 fell 0.8%
- Nasdaq 100 futures were steady. The Nasdaq 100 fell 1%
- Japan’s Topix index rose 0.5%
- Australia’s S&P/ASX 200 index shed 0.7%
- South Korea’s Kospi index was steady
- Hong Kong’s Hang Seng index slid 1%
- China’s Shanghai Composite index fell 0.4%
- Euro Stoxx 50 futures were little changed
Currencies
- The Japanese yen was at 113.71 per dollar
- The offshore yuan was at 6.3700 per dollar
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was at $1.1274
Bonds
- The yield on 10-year Treasuries fell one basis point to 1.43%
- Australia’s 10-year bond yield rose two basis points to 1.56%