US index futures advance as stock selloff moderates

Bloomberg

A selloff in stocks moderated on Tuesday as traders assessed risks from China’s crackdown on the real-estate sector and looked ahead to this week’s Federal Reserve meeting.
The Stoxx Europe 600 index climbed more than 1%, rebounding from the biggest drop in two months, with energy companies leading the advance and most industry sectors in the green. Royal Dutch Shell Plc rises more than 4% after the company offered shareholders an unexpected payout from the sale of shale
oil fields.
US futures gained, suggesting some improvement in sentiment after concerns about fallout from China Evergrande Group’s debt woes roiled markets. Dip-buyers in the last hour of trading helped the S&P 500 pare some losses, though the index still posted the biggest drop since May.
Aside from worries over Evergrande’s ability to make good on $300 billion of liabilities, investors are also positioning for the two-day Fed meeting, where policy makers are expected to start laying the groundwork for paring stimulus. Treasury yields rises and the dollar was steady.
“So much of this information is already known that we don’t think it will necessary set off a wave of problems,” John Bilton, head of global multi-asset strategy at JPMorgan Asset Management, said on Bloomberg TV. “I’m more concerned about knock-on sentiment at a time when investor sentiment is a bit fragile. But when we look at the fundamentals — the general growth, and direction in the wider economy — we still feel reasonably confident that the situation will right itself.”
A Hong Kong gauge of real-estate firms steadied, after developers disputed a report of pressure from the Chinese
government. Evergrande slid deeper in equity and credit markets. Concerns remain about broader contagion after S&P Global Ratings said the developer is on the brink of default. China’s markets reopen on Wednesday after holidays.
China’s property-sector upheaval — part of President Xi Jinping’s broader clampdown on private industries under his “common prosperity” initiative to reduce inequality — is adding to the risks confronting investors. These include stretched equity valuations and slower economic reopening due to the delta virus strain amid price pressures stoked by commodities. Markets are also digesting an outlook of reduced central bank policy support.
Elsewhere, Bitcoin slid for a third day in volatile trading, tumbling as much as 7.6% before bouncing back to above $43,000. Oil rebounded from two days of declines.
In Canada, Prime Minister Justin Trudeau won a third term in a snap election but fell short of regaining a parliamentary majority. The nation’s currency was among the best performers in the Group-of-10 basket.
The Stoxx Europe 600 rises as much as 1.1% as of 9:03 am London time and futures on the S&P 500 also climb by 1%.
While futures on the Nasdaq 100 climb 0.9%, futures on the Dow Jones Industrial Average also rise 1.1% and the MSCI Asia Pacific Index falls 0.5%. The MSCI Emerging Markets Index was little changed.
The Bloomberg Dollar Spot Index was little changed and the euro was also little changed at $1.1723.
While the Japanese yen falls 0.2% to 109.66 per dollar, the offshore yuan was little changed at 6.4784 per dollar and the British pound rises 0.2% to $1.3685.
The yield on 10-year Treasuries advanced three basis points to 1.34% and Germany’s 10-year yield advanced two basis points to -0.30%. Britain’s 10-year yield advanced two basis points to 0.82%.