Stocks Set for Mixed Start Amid Inflation Risks: Markets Wrap

 Stocks Set for Mixed Start Amid Inflation Risks: Markets Wrap

(Bloomberg) — Stocks looked set for a mixed start Monday and U.S. equity futures fell as traders weighed risks to the pandemic recovery from an energy crunch and the prospect of tighter monetary policy to fight inflation.

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Australian shares dropped, while futures slipped for Japan and earlier signaled gains in Hong Kong. S&P 500 and Nasdaq 100 contracts were in the red after the gauges declined Friday in the wake of U.S. jobs growth data that fell significantly short of expectations while also showing a jump in earnings.

Treasuries retreated after the report, taking the 10-year yield past 1.6%. The wage gains and a jump in energy costs highlight price pressures that are adding to the case for tighter monetary policy. Many strategists expect the Federal Reserve to proceed with a tapering of bond purchases in coming weeks. There’s no cash Treasuries trading Monday due to a U.S. holiday.

West Texas Intermediate crude climbed and was trading at around the highest since 2014. New Zealand’s dollar was lower amid rising Covid-19 cases there.

In the U.K., Bank of England officials moved to reinforce signals of an imminent rise in interest rates to curb inflation. Aside from central bank tightening, investors are also braced for upcoming reports on third-quarter company profits and monitoring the debt woes and slowdown in China’s property sector.

“The tapering is very much on track for November,” Simon Ballard, First Abu Dhabi Bank chief economist, said on Bloomberg Television. In terms of Fed rate hikes, the jobs report puts the “focus on later rather than sooner.”

Goldman Sachs Group Inc. economists cut their forecasts for U.S. growth this year and next, blaming a delayed recovery in consumer spending. The declines were mostly offset by upgrades to projections for the following two years.

Elsewhere, tension over Taiwan is simmering. President Tsai Ing-Wen said the island is facing “unprecedented challenges” and will defend its sovereignty, pushing back after Chinese leader Xi Jinping declared a day earlier that unification will be achieved. Taiwan’s markets are closed for a holiday.

In cryptocurrencies, Bitcoin edged down to trade around $55,000.

Here are a few events to watch this week:

  • IMF/World Bank annual meetings start in Washington. Though Oct. 17

  • Bank of Korea policy decision and briefing. Tuesday

  • Atlanta Fed President Raphael Bostic speaks on inflation. Tuesday

  • U.S. FOMC minutes and CPI. Wednesday

  • China PPI, CPI. Thursday

  • U.S. initial jobless claims, PPI. Thursday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.4% as of 8:14 a.m. in Tokyo. The S&P 500 fell 0.2%

  • Nasdaq 100 futures lost 0.4%. The Nasdaq 100 declined 0.5%

  • Nikkei 225 futures fell 0.4%

  • Australia’s S&P/ASX 200 shed 0.7%

  • Hang Seng Index futures rose 0.8% earlier

Currencies

  • The Japanese yen was at 112.27 per dollar

  • The offshore yuan traded at 6.4451 per dollar

  • The Bloomberg Dollar Spot Index rose less than 0.1%

  • The euro was at $1.1568

Bonds

  • The yield on 10-year Treasuries advanced four basis points to 1.61% Friday

  • Australia’s 10-year bond yield rose four basis points to 1.68%

Commodities

  • West Texas Intermediate crude rose 0.7% to $79.92 a barrel

  • Gold was at $1,754.90 an ounce, down 0.1%

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