Stocks Seen Steady as Recovery Eyed; Yields Fall: Markets Wrap

Andreea Papuc
·3 min read

(Bloomberg) -- Stocks in Asia look set to start the week steady as investors keep watch on how price pressures impact the pace of economic recovery.

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Futures edged up in Japan and fell in Hong Kong earlier. Australian shares fluctuated. U.S. futures dipped after all major U.S. equity benchmarks climbed to records Friday, with the S&P 500 posting its fifth consecutive weekly rally. That was after a larger-than-forecast and broad-based gain in U.S. payrolls indicated greater progress filling millions of vacancies as the effects of the delta variant faded.

Australian bonds rallied after the U.S. 10-year Treasury yield tumbled below 1.5%. Traders are shifting to a view that central banks won’t accelerate interest rate increases in the face of persistent inflation. Markets will closely watch a read on U.S. consumer prices this week.

Stocks in China will be in focus as the Communist Party meets for the first time in more than a year this week. The gathering is expected to lay the ground for extending the term of President Xi Jinping, who has rattled markets with his “common prosperity” campaign to redistribute the nation’s wealth.

Investors have been buoyed by a strong earnings season despite higher inflation and supply chain snarls. Sentiment was further shored after announcement of Pfizer Inc.’s Covid-19 pill, while concerns about how quickly central banks will withdraw stimulus eased. Meanwhile, the House on Friday passed the biggest U.S. infrastructure package in decades.

“We are now coming into a stronger period seasonally for shares and the combination of improving global growth and earnings, vaccines allowing a more sustained reopening and still low interest rates augurs well for shares over the next 12 months,” Diana Mousina, senior economist of the multi-asset group at AMP Capital, said in a note.

U.S. nonfarm payrolls increased 531,000 after large upward revisions to the prior two months. The unemployment rate fell to 4.6%, while the labor-force participation rate was unchanged.

Further on the economic front, China posted a record monthly trade surplus in October as exports surged, underscoring support for the Chinese economy that’s slowed sharply in recent months.

Elsewhere, oil advanced, paring a weekly loss. Bitcoin traded below $63,000.

What to watch this week:

  • China’s Communist Party’s decision-making Central Committee starts meeting Monday. Through Nov. 11.

  • Federal Reserve Bank of San Francisco President Mary Daly speaks Tuesday

  • China aggregate financing, money supply, new yuan loans Tuesday

  • China PPI Wednesday

  • U.S. wholesale inventories, CPI, initial jobless claims Wednesday

  • U.S. bond marked is closed in observance of Veterans Day Thursday

  • China holds its annual Singles’ Day, the world’s biggest shopping festival, when e-commerce giants like Alibaba and JD.com Inc. lure buyers with bargains Thursday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

  • S&P 500 futures slipped 0.1% as of 8:09 a.m. in Tokyo. The S&P 500 rose 0.4%

  • Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 0.1%

  • Nikkei 225 futures rose 0.2%

  • Australia’s S&P/ASX 200 Index was little changed

  • Hang Seng Index futures fell 0.6%

Currencies

  • The Japanese yen traded at 113.42 per dollar

  • The offshore yuan was at 6.3972 per dollar

  • The Bloomberg Dollar Spot Index fell 0.2% Friday

  • The euro was at $1.1564

Bonds

  • The yield on 10-year Treasuries declined eight basis points to 1.45%

  • Australia’s 10-year bond yield dropped seven basis points to 1.74%

Commodities

  • West Texas Intermediate crude rose 0.4% to $81.64 a barrel

  • Gold was at $1,817.06 an ounce

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