(Bloomberg) — Stocks and U.S. equity futures fell Monday amid a slump in Hong Kong property developers and jitters ahead of a Federal Reserve meeting that’s expected to hint at moving toward tapering stimulus. The dollar rose.
Hong Kong shares tumbled, with a report suggesting Beijing could widen its crackdown on private industries to the city’s real-estate firms. Investors are also tracking the risk of contagion from the debt crisis at developer China Evergrande Group, which was on track to close at a record low market value. A Hong Kong gauge of property shares sank. The offshore yuan declined.
Australian stocks and the nation’s currency weakened as iron ore extended losses below $100 a metric ton. U.S. equity futures were in the red after the S&P 500 slid the most in a month, a test for the psychology of buying the dip as the gauge jabs at its 50-day moving average.
Ten-year Treasury yields have risen ahead of the Fed meeting this week where policy makers are expected to start laying the groundwork for paring stimulus. Japan and China are among key Asian markets closed for holidays. There’s no cash Treasuries trading in Asia.
Aside from Evergrande and the prospect of reduced Fed stimulus, financial markets also face risks from uncertainty over the outlook for President Joe Biden’s $4 trillion economic agenda as well as the need to raise or suspend the U.S. debt ceiling. Investors were already fretting over a slowing global recovery from the pandemic and inflation stoked by commodity prices.
“We have inflation building in the system, wages are rising, supply chains firmly driving prices, and with so many central banks having to make rate decisions we think it’s a bit jittery,” Knights of Columbus Asset Advisors President and Chief Investment Officer, Tony Minopoli, said on Bloomberg Television.
Treasury Secretary Janet Yellen said the U.S. government will run out of money to pay its bills sometime in October without action on the debt ceiling, warning of “economic catastrophe” unless lawmakers take the necessary steps.
Elsewhere, the iron ore rout intensified as China stepped up restrictions on industrial activity in some provinces. In cryptocurrencies, Bitcoin slid and was trading at around $45,500. Other tokens such as Ether also retreated.
Here are key events to watch this week:
Canada federal election, MondayBank of Japan rate decision, WednesdayFederal Reserve rate decision, WednesdayBank of England rate decision, ThursdayFed Chair Jerome Powell, Fed Governor Michelle Bowman and Vice Chairman Richard Clarida discuss pandemic recovery, Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.9% as of 1:21 p.m. in Tokyo. The S&P 500 fell 0.9%Nasdaq 100 futures lost 0.7%. The Nasdaq 100 fell 1.2%Australia’s S&P/ASX 200 Index fell 2.1%Hong Kong’s Hang Seng Index slid 3.9%Euro Stoxx 50 futures declined 0.9%
Currencies
The Japanese yen was at 109.92 per dollarThe offshore yuan traded at 6.4801 per dollar, down 0.1%The Bloomberg Dollar Spot Index rose 0.2%The euro was at $1.1710, down 0.1%
Bonds
The yield on 10-year Treasuries advanced two basis points to 1.36% on FridayAustralia’s 10-year bond yield was at 1.31%
Commodities
West Texas Intermediate crude was at $71.36 a barrel, down 0.9%Gold was at $1,747.33 an ounce, down 0.4%
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