Stocks Rise, Futures Steady as China Concerns Ease: Markets Wrap
By- Focus remains on China crackdown, delta strain; crude falls
- S&P 500 hit record on earnings; growth risks aid Treasuries
Asian stocks rose Wednesday and U.S. futures were steady as concerns over China’s technology clampdown eased a little and company earnings helped counter worries about the delta strain of Covid-19.
Hong Kong rallied after Chinese state media tempered an attack on gaming companies, bolstering Tencent Holdings Ltd. Shares slipped in Japan, where SoftBank Group Corp. retreated on a potential block of its $40 billion sale of Arm Ltd. to chip company Nvidia Corp. U.S. equity contracts were steady in the wake of a record S&P 500 close on robust earnings. European futures rose.
Investors continue to assess regulatory risks in China as Beijing pushes on with a crackdown on technology giants. Alibaba Group Holding Ltd.’s revenue missed estimates for the first time in over two years, a sign of the clampdown’s toll.
The 10-year U.S. Treasury yield held its retreat, while Japan’s 10-year yield fell to zero for the first time since December. Oil weakened toward $70 a barrel. The delta strain is exacerbating concerns that the rebound from the pandemic is losing steam.
Solid earnings have propelled U.S. and European shares to all-time highs, weathering the spread of the more contagious Covid-19 variant as well as a burst of inflation attributed to pandemic-linked bottlenecks. In comparison, the mood in Asia is more somber amid China’s regulatory broadsides and lagging vaccination rates that are delaying economic reopening across the region.
“We think the delta variant is not going to stop the recovery, it’s just going to delay it,” Laila Pence, Pence Wealth Management president, said on Bloomberg Television. “The Federal Reserve is going to live with a lot more inflation. They don’t want to derail the recovery.”
The delta variant has pushed the threshold for herd immunity to well over 80% and potentially approaching 90%, according to an Infectious Diseases Society of America briefing. Meanwhile, analysts are reviewing economic growth projections for China as officials there grapple with the broadest Covid-19 outbreak since the beginning of the pandemic.
In New Zealand, jobs data strengthened rate-hike bets, bolstering its currency and sapping the 10-year bond.
Key U.S. jobs data due later this week could stoke market swings if they lead investors to adjust expectations over the Federal Reserve’s likely timeline for eventually tapering stimulus. Fed Vice Chair Richard Clarida is due to speak about monetary policy Wednesday.
Here are some key events to watch this week:
For more market analysis read our MLIV blog.
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— With assistance by Vildana Hajric, and Jennifer Bissell-Linsk
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