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Author: Don Obrien

Stocks Set for Steady Open as Policy Meetings Loom: Markets Wrap


(Bloomberg) — Asian stocks looked set for a steady open Tuesday as traders evaluated a record-high close for U.S. equities and awaited key central bank decisions amid concerns about elevated inflation.

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Futures were little changed for Japan, edged higher for Australia and rose for Hong Kong. U.S. contracts fluctuated after optimism over corporate earnings saw the S&P 500 hit a new peak and the Dow Jones Industrial Average touch 36,000 for the first time. Electric-vehicle giant Tesla Inc. extended a rally. An index of Chinese stocks traded in the U.S. jumped the most since early October.

The U.S. 10-year Treasury yield and the dollar were steady ahead of the Federal Reserve meeting. The policy review comes amid price pressures stoked by the most-widespread U.S. supply crunch since the oil crisis of 1973. The Fed is expected to announce a tapering of its massive bond-purchase program.

Australia’s central bank meeting Tuesday is being shadowed by speculation that it will scrap a bond-yield target after opting against defending it. The nation’s sovereign bonds slipped. Bank of England policy makers head into their Nov. 4 gathering knowing that a failure to deliver a once-unthinkable interest-rate hike would raise questions over their credibility with markets.

The earnings season has underpinned the equity market, countering worries about inflation and the prospect of tighter monetary policy. But pandemic-era supply-chain challenges coupled with higher energy costs could become a bigger test if they feed into wider, more enduring price pressures.

The key focus for the U.S. central bank meeting “will be much more on the Fed’s inflation stance than tapering,” Steve Englander, head of global G10 FX research at Standard Chartered Bank, wrote in a note. “The elephant in the room is headline and underlying inflation, which are higher than the FOMC was anticipating,” he added.

More than 80% of companies in the S&P 500 reporting third-quarter results have topped Wall Street estimates. At the same time, data showed supply-chain bottlenecks weighed on U.S. manufacturers in October.

President Joe Biden’s $1.75 trillion tax and spending package appeared to hit a fresh challenge, after Senator Joe Manchin said Congress needs more time to assess its impact.

Elsewhere, oil retreated amid rising stockpiles at the biggest U.S. storage hub, signaling a crude supply drain may be slowing. Bitcoin traded around $61,170.

Here are some events to watch this week:

  • Reserve Bank of Australia policy decision, Tuesday

  • Fed rate decision, U.S. factory orders and durable goods, Wednesday

  • OPEC+ meeting on output, Thursday

  • Bank of England rate decision, Thursday

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

  • U.S. unemployment, nonfarm payrolls, Friday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

  • S&P 500 futures were little changed as of 7:40 a.m. in Tokyo. The S&P 500 rose 0.2%

  • Nasdaq 100 futures were flat. The Nasdaq 100 rose 0.4%

  • Nikkei 225 stock futures were little changed

  • Australia’s S&P/ASX 200 Index futures rose 0.2%

  • Hang Seng Index futures rose 1.5%

Currencies

  • The Japanese yen was at 114.06 per dollar

  • The offshore yuan was at 6.3962 per dollar

  • The Bloomberg Dollar Spot Index was little changed

  • The euro traded at $1.1603

Bonds

Commodities

  • West Texas Intermediate crude slid 0.2% to $83.86 a barrel

  • Gold was at $1,792 an ounce

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Oliver Bolt

Oliver Bolt

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