U.S. Futures Rise, China Tech Saps Asia; Crude Up: Markets Wrap

(Bloomberg) — U.S. and European equity futures rose Friday while Chinese technology stocks weighed on Asia. Treasury yields and the dollar ticked up as traders evaluated the risk of faster monetary tightening to fight inflation.

Hong Kong equities underperformed as Alibaba Group Holding Ltd. sank, contributing to a slide in a gauge of Chinese tech shares. Alibaba slashed its outlook for fiscal 2022 revenue amid intensifying competition, dwindling consumer spending and Beijing’s regulatory curbs. Confirmation of a stimulus package spurred a modest gain in Japanese shares.

The travails of China’s tech firms contrast with the more optimistic mood around their U.S. counterparts. Nasdaq 100 contracts outperformed after megacap tech helped lift Wall Street to record highs in a choppy session ahead of Friday’s options expiration.

Treasury yields edged up and a dollar gauge remained on course for a fourth weekly advance. Commodities including crude oil, iron ore and copper pushed higher. Gold advanced, but Bitcoin extended a slide, dropping to about $56,000.

Global stocks continue to hover near records, propped up by robust U.S. corporate earnings growth. But price pressures that could accelerate interest-rate hikes and hamper the pandemic recovery are shadowing markets. Federal Reserve Bank of Atlanta President Raphael Bostic said that it would be appropriate to try to raise rates around summer next year.

“You can come up with a very strong list of reasons why you shouldn’t be invested,” Kristen Bitterly, regional head of investments for North America at Citi Private Bank, said on Bloomberg Television. “The best way to combat that is really with the record-high profitability that we’ve seen and to recognize that not all parts of the market are created equal.”

Rate-Hike Bets

More commentators are predicting a quicker pace of Fed policy tightening. For instance, TD Securities strategists followed those at Citigroup Inc. and Morgan Stanley in recommending eurodollar trades that pay off if the Fed raises rates more aggressively than currently expected.

Meanwhile, lawmakers in the U.S. House of Representatives are due to vote on President Joe Biden’s approximately $2 trillion economic plan. The bill’s fate in the Senate is still uncertain. Traders are also monitoring for Biden’s pick for Fed chair nominee from Governor Lael Brainard and incumbent Jerome Powell.

Elsewhere, China Beige Book International Chief Executive Officer Leland Miller, speaking on the sidelines of the Bloomberg New Economy Forum in Singapore, said that China’s economy is slowing more than people think.

The People’s Bank of China warned against one-way yuan bets after the currency climbed to a six-year high against a basket of peers.

What to watch this week:

• Fed’s Richard Clarida and Mary Daly speak at Asia Economic Policy Conference. Friday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 2:20 p.m. in Tokyo. The S&P 500 rose 0.3%
• Nasdaq 100 futures increased 0.5%. The Nasdaq 100 rose 1.1%
• Japan’s Topix index rose 0.3%
• South Korea’s Kospi increased 0.6%
• Australia’s S&P/ASX 200 index rose 0.2%
• Hong Kong’s Hang Seng index lost 1.8%
• China’s Shanghai Composite index rose 0.4%
• Euro Stoxx 50 futures climbed 0.4%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was at $1.1355
• The Japanese yen was at 114.33 per dollar, down 0.1%
• The offshore yuan was at 6.3866 per dollar

Bonds

• The yield on 10-year Treasuries rose about one basis point to 1.59%
• Australia’s 10-year bond yield rose two basis points to 1.81%

Commodities

• West Texas Intermediate crude added 0.6% to $79.50 a barrel
• Gold was at $1,863.12 an ounce, up 0.2%