Stocks Steady, Dollar Dips Amid Evergrande Report: Markets Wrap

Sunil JagtianiFri, October 22, 2021, 9:47 AM

(Bloomberg) — Asian stocks were steady Friday and the dollar slipped as a report that developer China Evergrande Group pulled back from the brink of default aided sentiment.

Most Read from Bloomberg

• The Top Money Maker at Deutsche Bank Reaps Billions From Singapore
• Forget Palm Springs—Santa Fe Is the New Mecca for Modern Architecture
• Google’s Biggest Moonshot Is Its Search for a Carbon-Free Future
• A $30 Billion Fortune Is Hiding in China’s Silicon Valley
• Beef Industry Tries to Erase Its Emissions With Fuzzy Methane Math

Rallies in China’s technology equities and property shares were among the more notable moves. Local media said Evergrande paid a dollar-bond coupon before a weekend deadline, easing concerns about possible contagion from any default by the firm. Chinese junk bonds and the Australian dollar climbed.

The S&P 500 edged up to a record overnight but the mood soured after the cash session when Snap Inc. — owner of the Snapchat app — tumbled on a tempered earnings outlook, hurting other technology shares in late trading. Nasdaq 100 futures retreated, S&P 500 contracts were little changed and European ones advanced.

The 10-year U.S. Treasury yield fell below 1.70% but remains higher for the week. The Federal Reserve is nearing a reduction in bond purchases and traders are ramping up bets on rate hikes to quell price pressures. Market-implied expectations for inflation have hit multiyear highs.

Global stocks are set for a third weekly advance, helped by the ongoing global recovery from the health crisis. The rally is being shadowed by the prospect of a faster-than-expected tightening of monetary policy to curb inflation, which is being stoked by an energy crunch and creaking supply chains.

“The U.S. economy is still on solid footing, but now inflation remains the biggest threat,” Edward Moya, senior market analyst at Oanda Corp., wrote in a note, adding investors are waiting for more earnings reports as well as the final shape of President Joe Biden’s economic agenda.

Biden said he doesn’t think there are enough Democratic votes to raise tax rates in a deal on that agenda, but that he believes he’ll reach an agreement on the overall legislative package. A White House official said Biden was referring only to corporate tax rate increases.

In Australia, the central bank bought A$1 billion ($746 million) of April 2024 bonds to defend its yield target. The yield fell toward the 0.1% goal.

Snap’s outlook included a warning that global supply-chain issues are weighing on advertising spending. Shares in other tech firms exposed to digital advertising, like Facebook Inc. and Twitter Inc., weakened in late trading.

Elsewhere, crude oil was lower, and Bitcoin steadied after slipping back from its recent record.

For more market analysis, read our MLIV blog.

Events to watch this week:

• Fed Chair Jerome Powell takes part in policy panel discussion, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 7:10 a.m. in London. The S&P 500 rose 0.3%
• Nasdaq 100 futures retreated 0.5%. The Nasdaq 100 rose 0.7%
• Japan’s Topix index was steady
• Australia’s S&P/ASX 200 index was flat
• South Korea’s Kospi index fell 0.1%
• China’s Shanghai Composite index lost 0.2%
• Hong Kong’s Hang Seng index increased 0.2%

Currencies

• The Bloomberg Dollar Spot Index dipped 0.1%
• The euro was at $1.1626
• The Japanese yen was at 113.98 per dollar
• The offshore yuan was at 6.3944 per dollar

Bonds

• The yield on 10-year Treasuries dipped three basis points to 1.67%
• Australia’s 10-year bond yield was one basis points higher at 1.80%

Commodities

• West Texas Intermediate crude was at $81.92 a barrel, down 0.7%
• Gold was at $1,787.52 an ounce, up 0.3%