(Bloomberg) — Asian stocks fell Monday as China’s widening technology-sector crackdown hurt Hong Kong equities, overshadowing last week’s rally in U.S. shares to an all-time high on robust corporate earnings.
Hong Kong dropped about 2% and Chinese stocks retreated, while Japan jumped after reopening from a two-day holiday. Beijing’s latest tightening is a reform of its $100 billion education tech sector, undermining one of China’s hottest investment plays in recent years.
U.S. equity contracts slipped after a record Wall Street close Friday, with the S&P 500 almost doubling from the depths of the pandemic. About 87% of the S&P 500 firms reporting results so far this season have beaten estimates.
Treasury yields inched lower but traders are braced for possible turbulence as Fed officials resume talks at this week’s two-day policy meeting on when and how to taper stimulus. Treasury market volatility has jumped on economic risks from the spread of the contagious delta variant of Covid-19. The yen climbed as risk-off sentiment took hold.
Investors have taken heart from a spectacular U.S. earnings season but concerns about inflation and the delta strain linger, portending bouts of volatility. The outlook for the Fed’s $120 billion in monthly bond purchases also remains key: economists surveyed by Bloomberg expect the central bank to start scaling back asset purchases next year and to raise interest rates at a quicker pace through 2024 than previously thought.
Read more: Whipsawed Bond Traders Hunker Down for the Return of the Fed
“The second half of the year is going to be this glass half full half empty context where you have a lot of good news,” including monetary and fiscal support and good earnings, Virginie Maisonneuve, Allianz Global Investors global chief investment officer for equity, said on Bloomberg Television. At the same time, you could see U.S. and European economies peaking, she added. “We are still in a fragile environment. With the delta variant, governments and central banks will be very careful and it might go on for a bit longer.”
U.S.-China tension is on the radar too. The two sides hold their first high-level talks since March, with Deputy Secretary of State Wendy Sherman, the U.S.’s No. 2 diplomat, set to meet Foreign Minister Wang Yi on Monday.
Elsewhere, Bitcoin jumped toward $40,000, continuing a recent rally. Crude oil fluctuated around $72 a barrel.
Here are some key events to watch this week:
Tesla, Alphabet, Apple, Facebook, Amazon report earnings this weekHigh-level U.S.-China talks due MondayFederal Reserve policy meeting concludes WednesdayU.S. GDP data are due Thursday
These are some of the main moves in markets:
Stocks
S&P 500 futures slipped 0.3% as of 11:40 a.m. in Tokyo. The S&P 500 rose 1%Nasdaq 100 futures were little changed. The Nasdaq 100 climbed 1.2%Japan’s Topix index added 1.4%Australia’s S&P/ASX 200 index increased 0.1%South Korea’s Kospi index fell 0.3%Hong Kong’s Hang Seng index slid 2.4%China’s Shanghai Composite index dropped 1.5%Euro Stoxx 50 futures declined 0.5%
Currencies
The Japanese yen was at 110.36 per dollar, up 0.2%The offshore yuan was at 6.4857 per dollar, down 0.1%The Bloomberg Dollar Spot Index was little changedThe euro was steady at $1.1774
Bonds
The yield on 10-year Treasuries dipped almost two basis points to 1.26%Australia’s 10-year bond yield fell one basis point to 1.18%
Commodities
West Texas Intermediate crude dipped 0.4% to $71.76 a barrelGold was at $1,805.37 an ounce, up 0.2%
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