Stable US stocks, futures; Turkish lira collapses: markets envelop themselves

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(Bloomberg) – European stocks and US futures were flat on Monday as traders weighed inflation concerns, growing risks of Covid-19 and the outlook for China at the start of a week filled with reports on the benefits of big technologies. The Turkish lira has fallen to an all-time high amid a diplomatic row.

The Stoxx Europe 600 index changed little. The basic resources and energy sectors advanced as crude oil and metals increased their gains. Telecom and consumer stocks were the biggest losers. Futures on the Nasdaq 100 edged higher, while contracts on the S&P 500 were flat.

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Stocks fell in Japan and were mixed in China, where the central bank boosted a daily cash injection and authorities broadened a property tax trial. Signs that it would take at least five years before authorities impose a nationwide property tax have bolstered some industrial metals.

The 10-year US Treasury yield rose and the dollar slipped against a basket of major peers. Federal Reserve Chairman Jerome Powell signaled on Friday that inflation could stay higher for longer. He said the Fed would soon start reducing its bond purchases, but would remain patient in the face of rate hikes.

Global equities have remained resilient despite risks from price pressures fueled by supply chain bottlenecks and rising energy costs. Treasury Secretary Janet Yellen is among those who advise the inflation picture to reflect temporary pain that will subside in the second half of 2022. Investors fear that tighter monetary policy to control inflation could causes volatility.

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The Fed is becoming increasingly hawkish as it reacts to inflationary pressures “so we can expect more rate hikes than the market is currently anticipating,” Rajeev de Mello, managing director of Deep Learning Investments, told Bloomberg Television . “There is fear that a faster cut or a more hawkish Fed creates the risk of a slowdown.”

Traders are also monitoring an outbreak of the delta virus strain in China that is expected to worsen. The nation has sought to allay concerns about the slowing economy with a lengthy commentary in state media outlining how the government is managing risk and remaining confident in achieving its goals for the year.

“This new Covid cluster will likely mean retail sales are going to be a bit weaker by the end of the year,” Julia Wang, global market strategist at JPMorgan Private Bank, told Bloomberg Television. “That said, the overall impact is expected to be short-lived, as we can see that authorities generally improve with the testing, tracing and containment of these clusters.”

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In the United States, the five biggest tech companies are expected to release their results in the coming days, starting with Facebook Inc. on Monday. Meanwhile, the European Central Bank’s meeting this week will be closely watched for advice on its pandemic bond purchase program.

Gold rose to $ 1,800 an ounce and crude oil continued its rally. Saudi Arabia said the OPEC + alliance should maintain its cautious approach to managing global crude supplies given the continued demand threat posed by the pandemic. Bitcoin held above $ 62,000.

Elsewhere, the pound fell after Turkish President Recep Tayyip Erdogan warned that 10 ambassadors, including those from the United States, Germany and France, were no longer welcome after calling for the release of a businessman and philanthropist. The Turkish currency was already under pressure after the larger-than-expected rate cut last week.

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Here are some events to watch this week:

Profits: Amazon, Apple, Facebook, Microsoft, Twitter, Samsung Electronics, China Vanke, PetroChina, Ping An Insurance Group Australia CPI, WednesdayU.S. Wholesale stocks, US durable goods, Wednesday Bank of Japan monetary policy decision briefing, Thursday ECB rate decision, President Christine Lagarde briefing, Thursday GDP, first jobless claims, Thursday Joint meeting of G-20 finance and health ministers ahead of weekend leaders’ summit, Friday

For more market analysis, read our MLIV blog.

Some of the main movements in the markets:

Actions

The Stoxx Europe 600 was little changed at 8:55 a.m. London time. S&P 500 futures were little changed. Nasdaq 100 futures rose 0.2% little changed

Currencies

Bloomberg Dollar Spot Index fell 0.1% Euro rose 0.2% to $ 1.1662 Japanese yen fell 0.1% to 113.64 per dollar Offshore yuan rose 0.1% to 6.3762 per dollar British pound rose 0.2% to $ 1.3783 Turkish lira weakened 1.5% to 9.7524 per dollar

Obligations

The 10-year Treasury bill yield rose three basis points to 1.66% Germany’s 10-year yield rose two basis points to -0.09% The 10-year bond yield Britain rose two basis points to 1.16%

Merchandise

Brent crude rose 0.7% to $ 86.15 per barrel Spot gold rose 0.4% to $ 1,798.96 per ounce

© 2021 Bloomberg LP

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