U.S. Futures, Asian Stocks Fall After Tech Misses: Markets Wrap

On Oct 29, 2021

(Bloomberg) — Asian stocks and U.S. futures fell Friday after disappointing earnings from Amazon.com Inc. and Apple Inc. and as traders weighed bond-market gyrations on concerns over inflation and monetary tightening.

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Shares were lower in Japan, Australia and South Korea. Nasdaq 100 contracts underperformed S&P 500 counterparts. Apple and Amazon fell in extended trading, signaling a more than $200 billion drop in combined market value when the U.S. reopens. That overshadowed upbeat views on company performance that earlier took Wall Street to a record close.

The U.S. 10-year Treasury yield dipped. The curve between 20- and 30-years has inverted for the first time since the U.S. government reintroduced a two-decade maturity in 2020. Inflation pressures and the prospect of interest-rate hikes are whipsawing global bond markets. Australian debt was under pressure after the central bank opted against defending its 0.1% yield-target.

The U.S. dollar was near a one-month low and crude oil fluctuated. In China, the debt crisis at China Evergrande Group remains in focus. Some holders of one of its bonds received an overdue interest payment, buying more time for the troubled property developer.

Markets are grappling with a number of crosscurrents. Generally positive corporate performance has helped to underpin global equities. But inflation risks from supply-chain snarls and costlier raw materials are boosting expectations for rate hikes and dimming the economic outlook.

“If we’re going on the right path, but at a slower pace — which means the policy support persists for longer,” then that’s “still positive for markets,” said Lee Ferridge, head of North America multi-asset strategy at State Street.

The latest data showed U.S. growth slowed more than expected in the third quarter, hampered by supply chains and a surge in Covid-19 cases. A separate report showed that weekly jobless claims fell to a pandemic low.

Meanwhile, President Joe Biden called on lawmakers to push ahead with a revised $1.75 trillion tax and spending plan, which has been scaled back from a previous $3.5 trillion proposal. A $550 billion infrastructure bill is also pending.

Elsewhere, the European Central Bank renewed its pledge to conduct emergency bond-buying at a “moderately” slower pace. President Christine Lagarde acknowledged inflationary pressures will last longer than expected. Investors kept alive bets for rate hikes as soon as next year, bolstering the euro.

In cryptocurrencies, Bitcoin retreated below $58,000 during a sharp swoon in U.S. trading. The largest cryptocurrency rebounded and was around $60,000 in Asian hours.

Here are some events to watch this week:

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These are the main moves in markets:

Stocks

S&P 500 futures fell 0.3% as of 9:35 a.m. in Tokyo. The S&P 500 rose 1%.
Nasdaq 100 futures shed 0.6%. The Nasdaq 100 rose 1.2%
Japan’s Topix index fell 0.9%
South Korea’s Kospi lost…