Asian Stocks Edge Up Amid Caution Over China Curbs: Markets Wrap

Asian Stocks Edge Up Amid Caution Over China Curbs: Markets Wrap
Andreea Papuc
·3 min read

(Bloomberg) -- Most Asian stocks rose Tuesday as China and Hong Kong stabilized from a tailspin sparked by Beijing’s sweeping regulatory overhaul. Another record close on Wall Street also supported sentiment.

Shares fluctuated in Hong Kong but climbed in China and Japan. U.S stock futures inched lower after the S&P 500 hit a new peak, with Tesla Inc. the latest firm to post better-than-expected results. The Nasdaq 100 and Dow Jones Industrial Average also ended at all-time highs.

The Nasdaq Golden Dragon China Index -- which tracks 98 of China’s biggest firms listed in the U.S. -- suffered its largest two-day drop since 2008, hurt by China’s clampdown on sectors ranging from technology to education and real estate as Xi Jinping’s Communist Party tightens its grip on the economy.

Treasuries and the dollar were steady ahead of this week’s Federal Reserve policy meeting, where officials are expected to discuss an eventual tapering of stimulus. The real yield on U.S. 10-year debt touched a record low, which for some reflects concerns over the spread of the delta coronavirus variant and a possible peak in the economic recovery from the pandemic.

Beijing’s crackdown has left investors wondering which sectors might be targeted next and whether the selloff in Chinese equities increases the odds of wider risk aversion. At the same time, robust corporate profits and the ongoing rebound from the health crisis in the most-vaccinated nations are bulwarks for sentiment. Traders are also awaiting the Fed meeting for a steer on how inflationary pressures are shaping the monetary policy outlook.

“Equity markets have oscillated between inflation and growth fears, which should not coexist,” Esty Dwek, head of global market strategy at Natixis Investment Managers Solutions, wrote in a note. She expects “growth will hold up, the reopening will last and the Fed will err on the side of caution and maintain its accommodative stance,” while adding volatility also lies ahead.

Elsewhere, Bitcoin pared gains to trade near $37,000 after briefly topping $40,000. Crude oil made a modest advance as as investors bet the global demand recovery will remain intact despite the Covid-19 resurgence.

Here are some key events to watch this week:

Alphabet, Apple, Facebook, Amazon report earnings this weekFederal Reserve policy meeting concludes WednesdayU.S. GDP data are due Thursday

Stocks

S&P 500 futures fell 0.1% as of 10:51 a.m. in Tokyo. The S&P 500 rose 0.2%Nasdaq 100 futures lost 0.1%. The Nasdaq 100 climbed 0.1%Japan’s Topix index added 0.6%Australia’s S&P/ASX 200 index rose 0.4%South Korea’s Kospi index increased 0.8%Hong Kong’s Hang Seng index climbed 0.2%China’s Shanghai Composite index rose 0.2%

Currencies

The Japanese yen was at 110.27 per dollar, up 0.1%The offshore yuan traded at 6.4802 per dollarThe Bloomberg Dollar Spot Index was little changedThe euro was at $1.1804

Bonds

The yield on 10-year Treasuries was steady at 1.29%Australia’s 10-year bond yield rose two basis points to 1.20%

Commodities

West Texas Intermediate crude rose 0.3% to $72.12 a barrelGold was at $1,796.20 an ounce

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