Stocks Steady, Futures Up Amid China Growth Effort: Markets Wrap

(Bloomberg) -- Asian stocks were steady Thursday and U.S. equity futures rose as traders weighed China’s efforts to cushion its economy as well as robust U.S. expansion that may hasten the withdrawal of monetary stimulus.

MSCI Inc.’s Asia-Pacific share index snapped a three-day drop. Equities came off their lows in Hong Kong and China, where Beijing urged local governments to boost investment to counter a growth slowdown. Meanwhile, the Chinese city of Chengdu sought to ease a cash crunch at property developers, suggesting regulators are fine-tuning a prolonged a crackdown on the real estate sector.

U.S. and European futures climbed after modest Wall Street gains overnight. The latest U.S. data showed a solid economic recovery, including resilient consumer spending despite persistent price pressures. Fed officials at their last meeting were open to a quicker removal of policy support to curb inflation.

Bets on an earlier Fed interest-rate liftoff saw shorter maturity Treasury yields advance, while longer-maturity rates retreated, flattening the yield curve. There’s no cash Treasuries trading due to the U.S. Thanksgiving holiday. Treasury futures edged lower. The dollar held around a 16-month high.

Global stocks remain near records even as central banks cut back on monetary accommodation and a Covid surge in Europe saps sentiment. Assets from equities to commodities to cryptocurrencies have delivered substantial gains this year. Investors are evaluating how much further they can go as the recovery from the pandemic continues but liquidity tailwinds start to cool.

“These minutes were hawkish,” Priya Misra, TD Securities global head of rates strategy, said on Bloomberg Television. “The market has moved the timing of the first rate hike now to June of 2022 which implies this earlier end to QE is already priced in. The market is going to struggle until we get more data.”

U.S. reports showed personal spending rose in October by more than expected, while a closely watched inflation measure posted the largest annual increase in three decades. Jobless claims fell to the lowest since 1969.

Fed’s Daly

San Francisco Fed President Mary Daly said it would be hard to argue against a faster reduction in bond purchases if reports on the labor market and consumer prices due out early next month show continued strength.

Elsewhere, South Korea followed New Zealand in raising interest rates to contain inflation. The won fell amid an uncertain timeline for the next hike. Crude oil was steady as traders await the response of OPEC+ to a coordinated release of strategic reserves by consuming nations.

For more market analysis, read our MLIV blog.

Here are some key events this week:

• U.S. Thanksgiving Day: U.S. equity, bond markets closed Thursday
• Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.3% as of 2:42 p.m. in Tokyo. The S&P 500 rose 0.2%
• Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 0.4%
• Japan’s Topix index rose 0.4%
• Australia’s S&P/ASX 200 Index climbed 0.1%
• South Korea’s Kospi index declined 0.4%
• Hong Kong’s Hang Seng Index added 0.2%
• China’s Shanghai Composite Index was little changed
• Euro Stoxx 50 futures rose 0.5%

Currencies

• The Japanese yen was at 115.37 per dollar
• The offshore yuan traded at 6.3922 per dollar
• The Bloomberg Dollar Spot Index was steady
• The euro was at $1.1210, up 0.1%

Bonds

• The yield on 10-year Treasuries declined three basis points to 1.63% Wednesday
• Australia’s 10-year bond yield was at 1.87%

Commodities

• West Texas Intermediate crude was at $78.40 a barrel
• Gold was at $1,792.64 an ounce, up 0.2%

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