Stocks, U.S. Futures Rise as Traders Mull Recovery: Markets Wrap

(Bloomberg) — Most Asian stocks rose along with U.S. equity futures Thursday as traders took in their stride further signs of the global inflationary pressures building up in the recovery from the pandemic.

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MSCI Inc.’s Asia-Pacific share index rose for a second day. South Korea outperformed but stocks were steady in China, where data showed the highest factory-gate inflation in almost 26 years. U.S. and European futures pushed higher after Wall Street snapped a three-day losing streak, with the tech-heavy Nasdaq 100 outperforming the S&P 500.

Longer term Treasuries slipped, trimming an overnight rally, but the 10-year yield remained below 1.60%. A report showed U.S. inflation held above 5%, while the latest Fed minutes signaled a tapering of bond purchases from mid-November or mid-December.

Crude oil stabilized above $80 a barrel and gold dipped from the highest in nearly a month. Singapore’s dollar rose after the central bank unexpectedly tightened monetary policy settings. The yen weakened and gauge of the U.S. dollar was steady.

Investors continue to evaluate the resilience of economic reopening to supply chain disruptions, a jump in energy prices and the prospect of reduced central bank support. In the earnings season so far, executives at S&P 500 companies mentioned the phrase “supply chain” about 3,000 times on investor calls as of Tuesday — far higher than last year’s then-record figure.

The current environment “still favors equities in the medium term although less so than before,” Virginia Martin Heriz, a portfolio manager in the macro strategies team at J.P.Morgan Asset Management, said in a seminar. While there may be a “soft” slowdown in the U.S. and Europe, “this is not stagflation that we are talking about because we are still growing well above trend.”

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Former Treasury Secretary Lawrence Summers castigated U.S. monetary policy makers for paying too much attention to social issues and not enough to the biggest risk to inflation since the 1970s. The Biden administration is trying to relieve supply-chain bottlenecks ahead of the Christmas shopping season, but officials acknowledge their options are limited.

In cryptocurrencies, Bitcoin has resumed its rally, taking the largest token above $58,000. Elsewhere, Hong Kong markets were shut Thursday for a holiday.

Here are a few events to watch this week:

Bank of America Corp., Morgan Stanley and Citigroup Inc. report earnings on Thursday
U.S. initial jobless claims, PPI on Thursday
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 0.3% as of 6:45 a.m. in London. The S&P 500 rose 0.3%
Nasdaq 100 futures increased 0.4%. The Nasdaq 100 rose 0.8%
Japan’s Topix index climbed 0.6%
South Korea’s Kospi added 1.2%
Australia’s S&P/ASX 200 Index gained 0.5%
China’s Shanghai Composite Index was steady
Euro Stoxx 50 futures rose 0.4%

Currencies

The Japanese yen was at 113.57 per dollar, down 0.3%
The offshore yuan traded at 6.4371 per dollar, down 0.1%
The Bloomberg Dollar Spot Index was steady
The euro traded at $1.1590

Bonds

The yield on 10-year Treasuries rose about one basis point to 1.55%
Australia’s 10-year yield fell six basis points to 1.63%

Commodities

West Texas Intermediate crude was at $81.12 a barrel, up 0.9%
Gold was at $1,790.32 an ounce, down 0.1%