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Author: Don Obrien

Stocks Up on Earnings Optimism; Treasuries Steady: Markets Wrap


(Bloomberg) — Asian stocks pushed higher Friday after a rally on Wall Street spurred by robust corporate earnings that took some of the focus away from inflation risks in the global economy.

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Equities rose in Japan, South Korea and Australia. U.S. futures edged up following the S&P 500’s best day since March. Results from major U.S. banks beat estimates, while chipmaker Taiwan Semiconductor Manufacturing Co. predicted a bullish year-end. Sentiment was boosted as U.S. producer prices advanced at the slowest pace this year and initial jobless claims fell.

The 10-year Treasury yield held a decline. The dollar was steady and the yen dipped. In one corner of the U.S. short-term rates market, traders are ramping up short positions in futures on bets the Federal Reserve will hike faster and more aggressively from the end of 2022 amid elevated price pressures.

In China, the central bank is expected to extend key policy loans maturing Friday to maintain banking-system liquidity and support the economy. Traders are continuing to monitor the debt crisis in the nation’s property sector. Hong Kong’s market reopens after a holiday.

Solid company earnings in the reporting season so far helped to temper fears that inflation stoked by surging energy prices and supply-chain snarls will hurt growth. Corporate profits have been a boon for the equity market throughout the pandemic. At the same time, the wider debate about whether a stagflation-like backdrop looms remains unresolved.

“We’re likely going to continue to see this elevated inflation and probably well into 2022,” Nicole Webb, senior vice president at Wealth Enhancement Group, said on Bloomberg Television. She expects the Fed to begin tapering stimulus next month and an earlier discussion of rate hikes than previously expected.

Bank of America Corp. Chief Executive Officer Brian Moynihan joined fellow finance-industry leaders like Morgan Stanley CEO James Gorman and Goldman Sachs Group Inc.’s John Waldron in predicting that inflation will stick around.

“Inflation is clearly not temporary,” Moynihan said in an interview Thursday on Bloomberg Television. “The Fed is starting to indicate it’s time for them to move” as the path out of the Covid-19 pandemic “is more assured,” he said.

Elsewhere, crude oil advanced and base metals have soared, with European smelters the latest casualties in the global energy crisis. A gauge of six industrial metals hit an all-time high on the London Metal Exchange.

Here are a few events to watch this week:

  • Goldman Sachs Group Inc. reports earnings on Friday

  • U.S. business inventories, University of Michigan consumer sentiment, retail sales on 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 9:12 a.m. in Tokyo. The S&P 500 gained 1.7%

  • Nasdaq 100 futures added 0.1%. The Nasdaq 100 rose 1.9%

  • Japan’s Topix index rose 0.9%

  • South Korea’s Kospi increased 1%

  • Australia’s S&P ASX/200 rose 0.6%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was at $1.1592

  • The Japanese yen was at 113.89 per dollar, down 0.2%

  • The offshore yuan was at 6.4361 per dollar

Bonds

Commodities

  • West Texas Intermediate crude rose 0.5% to $81.70 a barrel

  • Gold was at $1,795.92 an ounce

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