With new worries about the possibility of additional growth-stifling COvid curbs in China that could negatively affect the outlook for the global economy, stocks in Asia appear to be set for a cautious start on Monday.
Futures for Hong Kong were little changed despite Macau’s announcement that it will close almost all businesses for a week starting on Monday due to a virus outbreak. Futures for Japan and Australia increased.
US equity contracts declined after global equities gained for the week. In early trading, the dollar’s performance against key peers was mixed while crude oil fell.
Shanghai, a major financial center, announced its first case of the highly contagious BA.5 omicron sub-variant on Sunday and issued a “very high” risk warning, raising concerns about additional lockdowns given that China is still committed to eradicating the virus. Beijing has also committed to making efforts to support the economy.
Shadow markets are still under threat from high inflation and a sluggish economic expansion. A strong US employment report released on Friday reduced some concerns about a recession and raised anticipation of additional Federal Reserve monetary tightening.
The US 10-year yield is now above 3% but below the 2-year rate as a result of the decline in Treasuries. Inversions in the yield curve could indicate impending economic contraction.
A US inflation reading due later this week is anticipated to rise closer to 9 percent, a new four-decade high, supporting the Fed’s argument for a significant rate hike in July. Meanwhile, company earnings reports will provide insight into the recession worries that led to a $18 trillion first-half loss in global equities.
According to Chris Weston, head of research at Pepperstone Group, the consumer-price index data will be “the core driver of risk this week” and a 9 percent print is possible, which “should keep US bond yields headed higher.”
The pound was stable elsewhere as competition to succeed Boris Johnson as UK premier intensified. After the murder of former prime minister Shinzo Abe on Sunday, the ruling coalition in Japan increased its margin of victory in the upper house vote.
On Monday, the primary pipeline carrying Russian gas to Europe shuts down for ten days of maintenance. In anticipation of President Vladimir Putin using the chance to permanently cut off flows in retaliation for the West’s support of Ukraine following Russia’s invasion, Germany and its allies are preparing for the worst.
President Joe Biden stated that negotiations are still ongoing regarding potential US tariffs on imports from China. Some tariffs placed on consumer goods during the Trump administration may be loosened by his administration. In the upcoming weeks, Biden and Xi Jinping are anticipated to speak once more.
Several significant market moves include:
Stocks
- S&P 500 futures were down 0.3% in Tokyo as of 7:49 a.m. S&P 500 prices decreased by 0.1% on Friday.
- Futures for the Nasdaq 100 fell by 0.4 percent. The Nasdaq 100 increased by 0.1%. Friday
- Nikkei 225 futures increased by 0.8%.
- S&P/ASX 200 futures increased by 0.3%.
- Futures on the Hang Seng index barely changed.
Currencies
- Bloomberg Dollar Spot Index remained stable.
- The euro was trading at $1.0175, down 0.1%.
- The price of a dollar in Japanese yen was 136.18.
- Offshore yuan was trading at 6.6879 to the dollar.
Bonds
Commodities
- The price of West Texas Intermediate crude fell by 0.7% to $104.05 per barrel.
- Gold was up 0.1 percent at $1,743.87 per ounce.
