European equity futures fell while US contracts and stocks in China gained ground to provide a mixed picture for global equities. The yen and gold surged to the highest levels in more than six months.
(Bloomberg) — European equity futures fell while US contracts and stocks in China gained ground to provide a mixed picture for global equities. The yen and gold surged to the highest levels in more than six months.
Contracts for the Euro Stoxx 50 index fell to take the shine from a 1.7% jump for the benchmark on Monday. Futures for the S&P 500 rose after whipsawing Tuesday. Stocks across Asia were mixed as Hong Kong and mainland China stocks rallied after initial declines, while South Korean and Australian shares fell.
The mixed trading in stocks followed the sharp swings last year that saw 20% in value wiped from global equities, the worst run since the financial crisis. Bonds lost 16% of value, the biggest decline since at least 1990 for one leading measure, as central banks hiked interest rates to slow inflation.
“We’re starting the year with tight financial conditions, a potential inflation pulse coming out of China and by extension that means we’ll probably have to go into the start of this calendar year relatively cautious across the whole portfolio,” Marc Franklin, senior portfolio manager for Manulife Investment Management, said in an interview with Bloomberg Television.
The yen strengthened as much as 1% against the greenback to touch 129.52 per dollar — the highest level since May. It gained against all its Group-of-10 peers, in particular the commodity currencies of Australia, New Zealand and Canada. The advance follows sustained efforts by the Bank of Japan to depress yields on government debt, with the stronger yen indicating that traders believe the central bank will be forced to reduce its easy policy settings.
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The dollar traded flat and there was no cash Treasuries trading in Asia given Japanese markets are shut Tuesday. Gold surged about 1% to above $1,840 per ounce for the first time since June.
China’s economy triggered investors’ concern after it ended the year in a major slump as business and consumer spending plunged in December, with more disruption likely in the first few months of the year as Covid infections surge across the country.
Elsewhere in markets, oil fluctuated while the price of US natural gas fell as warmer weather was expected to reduce demand for heating. A private China purchasing managers index contracted for the fifth consecutive month. Other data on the docket for Tuesday includes German unemployment claims.
Read more: Treasury Strategists Expect Lower Yields, Steeper Curve in 2023
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 3:22 p.m. Tokyo time
- Australia’s S&P/ASX 200 Index fell 1.3%
- Hong Kong’s Hang Seng rose 2.1%
- The Shanghai Composite rose 0.9%
- Euro Stoxx 50 futures fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0665
- The Japanese yen rose 0.9% to 129.68 per dollar
- The offshore yuan rose 0.6% to 6.8867 per dollar
Cryptocurrencies
- Bitcoin was little changed at $16,741.9
- Ether was little changed at $1,218.34
Bonds
- Australia’s 10-year yield declined five basis points to 4.00%
Commodities
- West Texas Intermediate crude rose 0.1% to $80.36 a barrel
- Spot gold rose 1% to $1,843.05 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott and Tassia Sipahutar.
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