Stocks Pause as China Growth Target Disappoints : Markets Wrap

(Bloomberg) — Global stock markets were steady Monday as investors waited to see whether Treasury yields would extend last week’s declines and assessed the impact of China’s decision to set a lower economic growth target. .

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Europe’s Stoxx 600 Index opened slightly firmer and US stock futures were little changed after a rally on Friday fueled by conviction the Federal Reserve will not raise interest rates beyond record levels which are already trading at around 5.4%. Meanwhile, Chinese leaders set a lower-than-expected economic growth target that meant Beijing is unlikely to implement large-scale stimulus.

While the 5% target hurt commodity prices and weighed on mainland Chinese stocks, it may also help stave off another bout of price growth stemming from the world’s No. 2 economic recovery.

“The announcement may disappoint some investors but, on the other hand, it could ease some fears of a strong inflationary shock from China,” Kristoffer Kjaer Lomholt, head of FX and corporate research at Danske Bank, told clients in a note.

US 10-year Treasury yields have fallen below the psychologically key 4% level as investors looked past a report on Friday showing resilience in the services sector and focused instead on a price measure showing that service providers’ costs were rising at a slower rate. That helped the S&P 500 snap a three-week losing streak, while the Nasdaq 100 posted its best day since early February.

Bloomberg’s dollar gauge also fell further, after losing 0.8% last week.

The impact of China’s cautious growth targeting was felt most in commodity markets, with prices for iron ore, crude oil and copper falling. A Bloomberg Commodity Index fell as much as 1%, while the commodity-sensitive Australian and New Zealand dollars lost ground.

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In European markets, optimism was also tempered by a further decline in shares of embattled Credit Suisse Group AG, following news that Harris Associates had sold its entire stake in the lender after some two decades of ownership.

Next week could be crucial for markets, signaling how much more the Fed could raise rates. After recent data showed continued US labor market resilience, Friday’s Nonfarm Payrolls will be while traders will also be glued to their screens when Fed Chairman Jerome Powell speaks before Senate and House committees.

The central banks of Australia and Japan hold rate meetings on Tuesday and Friday respectively, the latter being Governor Haruhiko Kuroda’s latest policy decision.

Key events this week:

• US Factory Orders Durable Goods Monday

• US Wholesale Inventories, Consumer Credit, Tuesday

• Fed Powell Semiannual Monetary Policy Report to the Senate Banking Committee, Tuesday

• Australia rate decision, Tuesday

• Euro area GDP, Wednesday

• US MBA Mortgage Applications, ADP Job Change, Trade Balance, JOLTS Job Postings, Wednesday

• Fed Chairman Powell’s semiannual monetary policy report to the House Financial Services Committee, Wednesday

• Canada rate decision, Wednesday

• EIA crude oil inventories, Wednesday

• China CPI, PPI, Thursday

• US Challenger Job Cuts, Initial Jobless Claims, Change in Household Net Worth, Thursday

• Bank of Japan Rate Policy Decision, Friday

• US Nonfarm Payrolls, Unemployment Rate, Monthly Budget Statement, Friday

Some of the main movements in the markets:

Stocks

• S&P 500 futures were little changed at 3:28 a.m. New York time

• Nasdaq 100 futures rose 0.1%

• Dow Jones Industrial Average futures were little changed

• The Stoxx Europe 600 rose 0.2%

• The MSCI World Index rose 0.3%

• S&P 500 futures were little changed

• Nasdaq 100 futures rose 0.1%

• The MSCI Asia Pacific Index rose 0.9%

• The MSCI Emerging Markets Index rose 0.6%

coins

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.2% to $1.0651

• The British pound was little changed at $1.2039

• The Japanese yen was little changed at 135.86 to the dollar.

• The offshore yuan fell 0.5% to 6.9272 per dollar

CRYPTOCURRENCIES

• Bitcoin fell 0.4% to $22,392.2

• Ether fell 0.7% to $1,561.75

Captivity

• The yield on the 10-year Treasury fell two basis points to 3.94%.

• Germany’s 10-year yield fell four basis points to 2.67%

• The UK 10-year yield fell three basis points to 3.82%.

raw Materials

• West Texas Intermediate crude fell 0.4% to $79.37 a barrel

• Gold futures rose 0.4% to $1,862.20 an ounce.

This story was produced with the assistance of Bloomberg Automation.

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