Stocks, Futures Steady as Inflation Risk in Focus: Markets Wrap

(Bloomberg) -- Stocks were steady with U.S. futures Thursday as investors weighed the risk of higher inflation spurring a tightening of monetary policy.

In Europe, a slide in energy and travel shares offset gains in construction shares. Contracts on the S&P 500 Index were steady, while those on the Nasdaq 100 edged higher after the gauge’s worst slump in more than a month. In Asia, Chinese equities rallied on speculation officials will seek to ease the cash crunch at struggling property developers.

Concerns about price pressures have brought forward expectations of interest-rate hikes, after Wednesday’s data showing a stronger-than-forecast surge in U.S. consumer prices. The shock sent bonds and tech stocks tumbling as it dealt a blow to the argument that inflation is transitory. 

While the U.S. cash Treasury market is shut Thursday for a holiday, most European bonds extended a drop. Sovereign debt also slid in Australia and New Zealand. The dollar ticked up.

“This is the perfect time to gravitate toward defensive plays, to take profit and to be in the sectors that are strategically positioned toward this volatile market that presents a lot of challenges,” Katerina Simonetti, senior vice president at Morgan Stanley Private Wealth Management, said on Bloomberg Television.

In the U.K., data showed the economy grew more strongly than expected in November, which may reinforce expectations that policymakers will raise interest rates next month to rein in inflation. The FTSE 100 Index rose.

European Central Bank Governing Council member Robert Holzmann said the monetary authority could stop buying bonds as early as next September if inflation looks to have sustainably returned to the official target. 

Meanwhile, gold added to gains and Bitcoin held below $65,000 after dipping from a fresh all-time high Wednesday. Oil steadied, with investors weighing whether the White House will intervene to try and cool prices.

Elsewhere, Chinese technology shares jumped on a report that Didi Global Inc. is preparing to reintroduce its apps in the country by year-end as regulators wrap up their probes into the ride-hailing giant.

Traders digested filings showing Tesla Inc. Chief Executive Officer Elon Musk unloaded $5 billion of stock in the firm.

What to watch this week:

• China’s Communist Party’s decision-making Central Committee meets through Thursday
• 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.

Stocks

• The Stoxx Europe 600 was little changed as of 8:28 a.m. London time
• Futures on the Nasdaq 100 rose 0.3%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.1% to $1.1462
• The Japanese yen fell 0.2% to 114.09 per dollar
• The offshore yuan was little changed at 6.4036 per dollar
• The British pound fell 0.2% to $1.3377

Bonds

• Germany’s 10-year yield advanced one basis point to -0.23%
• Britain’s 10-year yield was little changed at 0.93%

Commodities

• Brent crude rose 0.1% to $82.76 a barrel
• Spot gold rose 0.4% to $1,857.59 an ounce

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