(Bloomberg) — Asian stocks steadied Thursday amid a reduction in Chinese borrowing costs and a pause in the global selloff in sovereign bonds.
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MSCI Inc.’s Asia-Pacific share index snapped a five-session drop, led by a climb in Hong Kong as Chinese technology equities rose. U.S. futures edged up after the S&P 500 closed down 1% in a choppy session. The Nasdaq Composite ended in correction territory, off more than 10% from a November high.
Chinese lenders lowered borrowing costs again after the central bank cut policy loan rates and pledged more easing for an economy struggling with a property slowdown and partial shutdowns to stem Covid.
Treasury yields slipped but remain higher for the week on concerns about elevated inflation and the prospect of Federal Reserve interest-rate hikes. A dollar gauge was little changed, crude oil fell and gold was around a two-month high. Australia’s currency advanced on a tumble in unemployment.
The dominant theme for markets remains prospective Fed rate hikes and the possible reduction of its holdings in Treasuries starting later in 2022. The withdrawal of outsized stimulus threatens to inject more volatility across a range of assets.
“The market is now facing uncertainty regarding both rate hikes and the balance sheet,” Steven Englander, global head of G-10 FX research at Standard Chartered Bank, wrote in a note. He added that “we therefore see scope for the recent volatility to continue near term.”
President Joe Biden said it’s the Fed’s job to rein in the fastest inflation in decades, and backed the central bank’s plans to scale back stimulus.
He also indicated his $2 trillion economic agenda will have to be broken up, and said he isn’t ready to ease tariffs on China yet. On Russia-Ukraine tension, he said he believed Russia will “move in” on Ukraine, adding such a step would hurt President Vladimir Putin “badly.”
In the U.S., upbeat earnings from companies including Morgan Stanley, UnitedHealth Group Inc. and Procter & Gamble Co. failed to shore up sentiment.
For more market analysis, read our MLIV blog.
What to watch this week:
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Netflix is among companies publishing earnings during the week
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U.S. data includes jobless claims Thursday
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Interest-rate decisions due from nations including Indonesia, Malaysia, Norway, Turkey and Ukraine, Thursday
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EIA crude oil inventory report, Thursday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.2% as of 12:19 p.m. in Tokyo. The S&P 500 fell 1%
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Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 1.1%
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Japan’s Topix index added 0.5%
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Australia’s S&P/ASX 200 index shed 0.1%
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South Korea’s Kospi index climbed 0.3%
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Hong Kong’s Hang Seng index rose 2.2%
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China’s Shanghai Composite index was steady
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Euro Stoxx 50 futures rose 0.1%
Currencies
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The Bloomberg Dollar Spot Index was steady
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The euro was at $1.1354
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The Japanese yen…
Read More: Stocks Boosted by China Easing; Treasuries Edge Up: Markets Wrap