(Bloomberg) — Asian stocks are set for a mixed start Wednesday after the latest inflation data added to the case for tighter Federal Reserve policy, weighing on U.S. shares. The dollar rose with Treasury yields.
Australian shares slipped, futures for Japan fell and Hong Kong contracts were little changed. S&P 500 and Nasdaq 100 futures wavered. Technology shares led the drop on Wall Street as investors fret over reduced stimulus and sour on costlier parts of the stock market. Concerns about the omicron virus variant continue to shadow trading too.
U.S. producer-price inflation hit a record of almost 10%, underlining the cost pressures rattling the American economy. The Fed on Wednesday is set to unveil a quicker tapering of bond purchases, paving the way for interest-rate hikes next year. The dollar advanced for a second day.
Meanwhile, Chinese data are expected to show slower economic activity due to a real-estate downturn and subdued consumption. Officials have signaled support for the economy next year. The central bank’s loan operations will be in focus for clues about the broader the policy stance.
Markets are being tested by a mix of high inflation, diminishing central bank liquidity support and uncertainty about the impact of the omicron strain. The flattening in the U.S. Treasury yield curve this year for some commentators points to a more challenging economic period ahead.
“We expect the markets to be volatile primarily because of the back and forth on the Covid news” and “worries again about inflation,” Rebecca Felton, RiverFront Investment Group senior market strategist, said on Bloomberg Television. “High valuations and uneven data are probably what we are going to see for the next couple of months.”
Meanwhile, the U.S. Senate voted to raise the nation’s debt ceiling by $2.5 trillion, an amount intended to extend the government’s borrowing authority until early 2023.
Elsewhere, crude oil extended a decline. The International Energy Agency said the global oil market has returned to surplus, while some countries tightened curbs against the omicron variant.
Covid-19 hospitalizations are surging across New York state and New Jersey, and restrictions are coming back in some parts of Europe. Pfizer Inc.’s experimental Covid-19 pill was highly effective at keeping patients out of the hospital but less adept at erasing milder symptoms.
Here are some key events this week:
- China releases November industrial output, retail sales data, Wednesday.
- Fed rate decision, Wednesday.
- U.S. business inventories, retail sales, empire manufacturing, Wednesday.
- BOE rate decision, Thursday.
- ECB rate decision, Thursday.
- U.S. housing starts, initial jobless claims, industrial production, Thursday.
- BOJ monetary policy decision, Friday.
- S&P Dow Jones Indices quarterly rebalance effective after markets close, Friday.
- “Quadruple witching” day in the U.S. market, when options and futures on indexes and equities expire, Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 8:16 a.m. in Tokyo. The S&P 500 fell 0.8%
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 1%
- Nikkei 225 futures fell 0.4%
- Australia’s S&P/ASX 200 Index shed 0.3%
- Hang Seng Index futures rose 0.1% earlier
Currencies
- The Japanese yen was at 113.74 per dollar
- The offshore yuan was at 6.3709 per dollar
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro was at to $1.1259
Bonds
- The yield on 10-year Treasuries advanced three basis points to 1.44%
- Australia’s 10-year bond yield rose three basis points to 1.57%
Commodities
- West Texas Intermediate crude fell 0.6% to $70.28 a barrel
- Gold was at $1,772.05 an ounce
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
