Bloomberg — Stocks may get some support Monday after Wall Street ended on a high note last week, but China’s economic malaise and a US dollar strength remain stumbling blocks.
Futures rose for Australia and Hong Kong, while Japan is shut for a holiday. US contracts edged higher in early trading after Wall Street snapped a five-day slide as banks led gains after some solid results.
Cash Treasuries won’t trade in Asia due to the Japan holiday. They advanced Friday as traders cut bets on a bigger Federal Reserve hike next week. A yield curve inversion continues to signal growth is under threat.
A drop in US consumer long-term inflation expectations eased some fears that price pressures are becoming entrenched, while strong retail sales underscored a resilient economy despite tightening monetary policy.
The dollar was mixed in early Asian trading. A gauge of the greenback’s strength has dipped from a record high.
China will be closely watched after policy makers pledged stronger support for an economy hobbled by Covid-19 lockdowns and a deepening property crisis.
Investors continue to be whipsawed by concerns over runaway inflation and the potential for a US recession. At the same time, equity valuations are becoming cheaper.
While stocks are pricing in a recession, there are signs that “this is a market that wants to start bottom fishing,” Lori Calvasina, head of US equity strategy at RBC Capital Markets, said on Bloomberg Television. “People are starting to look for things that have been de-risked,” she said, adding US small-caps are often cited as an example.
Oil was trading below $100 a barrel. The market is digesting slowing demand and the whether supply will be increased after President Joe Biden’s visit to Saudi Arabia.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 7:05 a.m. in Tokyo. The S&P 500 rose 1.9% Friday
- Nasdaq 100 futures rose 0.3%. The Nasdaq 100 rose 1.8%
- Australia’s S&P/ASX 200 Index futures rose 0.9%
- Hang Seng Index futures rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.5%
- The euro was at $1.0085
- The Japanese yen traded at 138.55 per dollar
- The offshore yuan was at 6.7655 per dollar
Bonds
- The yield on 10-year Treasuries declined four basis points to 2.92% Friday
Commodities
- West Texas Intermediate crude was at $97.72 a barrel
- Gold was at $1,708.17 an ounce
