Stocks face virus pressure, taper; Oil falls: market envelope
(Bloomberg) – Shares looked set to fall on Monday amid concerns over European restrictions on Covid-19 and the risk of a faster withdrawal of Federal Reserve stimulus measures. The Treasury yield curve was close to the flattest since the start of the pandemic.
Stocks fell in Australia, as did stock futures for Japan and Hong Kong, while US contracts edged up. Sectors sensitive to the economic outlook drove the S&P 500 lower on Friday, while the technology-heavy Nasdaq 100 outperformed home-based trading.
T-bills rallied on Friday, and the spread between yields on five-year and 30-year maturities narrowed to the lowest since March of last year. These measures reflect risk aversion as the surge in European infections pushes Austria into a lockdown and prompts Germany to tighten restrictions. They also followed signs that the Fed may consider withdrawing from its bond buying program more quickly.
Currencies such as the euro, British pound and New Zealand dollar have weakened against the US dollar. Oil has prolonged declines amid the prospect of key consumers adding emergency supplies as well as the surge in Covid-19 cases in Europe. Japan and the United States could make a joint announcement on the release of crude reserves as early as this week, according to a report.
Global equities remain close to all-time highs overall, facing a litany of worries, including a winter wave of rising coronavirus cases and high inflation leading central banks to tighten monetary policy. Other uncertainties include the choice of President Joe Biden as the Fed presidential candidate of Governor Lael Brainard and outgoing President Jerome Powell, as well as the perennial saga of suspending or lifting the US debt limit. .
A trio of Fed policymakers – Vice President Richard Clarida, Governor Christopher Waller and St. Louis Federal Reserve Chairman James Bullard – have signaled that the subject of a faster cut could be on. the table when the Federal Open Market Committee meets in December.
“What we’ll probably see this week is more Fed members socializing this idea of ââa faster QE slowdown,” Jason Schenker, president and chief economist of Prestige Economics, said on Bloomberg Television. “If this idea spreads and is emphasized repeatedly, it will increase the likelihood that the reduction announced in December will be faster than the pace announced in early November.”
In China, the strength of the yuan will be the center of attention after a currency panel urged banks to limit speculative foreign exchange trading. An adviser to the country’s central bank said the Chinese economy could enter a period of “near stagflation”.
Elsewhere, tension between Russia and Ukraine continues. U.S. intelligence has detected a build-up of Russian troops and artillery to prepare for a rapid and large-scale surge into Ukraine from several locations if President Vladimir Putin decides to invade, according to people familiar with them. conversations.
For more market analysis, read our MLIV blog.
Here are some key events from this week:
- PMI data for the euro zone and the United States on Tuesday
- Reserve Bank of New Zealand rate decision Wednesday
- US FOMC minutes, consumer income, wholesale inventories, new home sales, GDP, initial jobless claims, US durable goods, University of Michigan consumer sentiment. Every Wednesday
- Bank of Korea policy decision Thursday
- Thanksgiving in the United States: US stocks and bond markets closed on Thursday
- Bank of England Governor Andrew Bailey chats with Mohamed El Erian at a Cambridge Union event. Thursday
Some of the main movements in the markets:
- Futures on the S&P 500 rose 0.1% at 8:24 a.m. in Tokyo. The S&P 500 fell 0.1%
- Futures on the Nasdaq 100 rose 0.2%. The Nasdaq 100 rose 0.6%
- Nikkei 225 futures fell 0.5%
- Australian S & P / ASX 200 index fell 0.5%
- Hang Seng index futures fell 0.4% earlier
- The Japanese yen was at 114.07 per dollar, down 0.1%
- The offshore yuan was trading at 6.3928 to the dollar
- Bloomberg Dollar Spot Index rose 0.4%
- The euro was at $ 1.1272, down 0.2%
- The yield on 10-year treasury bills fell four basis points to 1.55%
- Australian 10-year bond yield fell around two basis points to 1.80%
- West Texas Intermediate crude fell 0.9% to $ 75.28 a barrel
- Gold was at $ 1,843.26 an ounce, down 0.1%
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