(Bloomberg) – Asian stocks appear poised for a flat open on Tuesday as traders assess heavy losses in Chinese stocks due to sweeping regulatory reform in Beijing as well as another record close on Wall Street.
Stock futures rose in Japan and Australia and were little changed in Hong Kong. The S&P 500 reached a new peak with Tesla Inc. It is the latest company to report better than expected results. The Nasdaq 100 and the Dow Jones Industrial Average also finished at all-time highs. US stock futures fluctuated.
The Nasdaq Golden Dragon China Index – which measures 98 of the largest Chinese companies listed in the US – suffered its biggest drop in two days since 2008, weighed down by China’s crackdown on sectors ranging from technology to education and real estate such as Xi Jinping’s Communist Party. He tightens his grip on the economy.
Treasuries and the dollar slipped ahead of this week’s federal policy meeting, as officials are expected to discuss eventual tapering of stimulus. The real yield on US 10-year debt touched a record low, which for some reflects concerns about the spread of the coronavirus delta variable and the potential peak in the economic recovery from the pandemic.
Beijing’s crackdown has left investors wondering which sectors might be targeted next and whether the sell-off in Chinese stocks increases the prospects for broader risk aversion. At the same time, strong corporate earnings and a steady recovery from the health crisis in the most vaccinated nations are a bulwark of sentiment. Traders are also awaiting the Federal Reserve’s meeting to guide them on how inflationary pressures shape the monetary policy outlook.
“Stock markets have swung between inflation and growth concerns, which should not coexist,” Estee Dweck, head of global market strategy at Natixis Investment Managers Solutions, wrote in a note. She said she expects “growth to continue, reopening will continue and the Fed will err on the side of caution and maintain its accommodative stance,” adding future volatility as well.
Elsewhere, Bitcoin pared gains to trade above $37,000 after briefly topping $40,000. Crude oil declined considering the potential impact of delta stress and demand restrictions.
Here are some of the main events to watch this week:
A report on earnings for Alphabet, Apple, Facebook and Amazon this week, and the conclusion of the Federal Reserve policy meeting on Wednesday in the United States. Gross domestic product data is due on Thursday
S&P 500 futures were flat. The S&P 500 rose 0.2% and Nasdaq 100 futures were little changed. The Nasdaq 100 is up 0.1% on the Nikkei 225, adding 0.3% and the Australian S&P/ASX 200 is up 0.3% and the Hang Seng futures are little changed.
The Japanese yen was at 110.39 per dollar, the offshore yuan was trading at 6.4832 per dollar, the Bloomberg dollar index was down 0.2%, the euro was at 1.1803
The 10-year Treasury yield advances one basis point to 1.29%.
West Texas Intermediate crude fell 0.2% to $71.91 a barrel, and gold was at $1,797.58 an ounce.
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