Asian stocks steady; yuan gains on Biden-Xi meeting

Bloomberg

Asian stocks were steady Tuesday and the yuan climbed as traders weighed the outcome of the first face-to-face virtual summit between US President Joe Biden and Chinese leader Xi Jinping. Treasury yields dipped.
MSCI Inc’s Asia-Pacific share gauge posted a modest advance, while US and European equity futures fluctuated after the S&P 500 and Nasdaq 100 ended flat. Hong Kong outperformed, while Japanese shares edged up.
Biden and Xi spoke of the need for cooperation, with both sides aiming to stabilize US-China ties but failing to deliver any big breakthroughs. The yuan approached its strongest level since 2018 on hopes of easing tensions.
The dollar falls and the 10-year US Treasury yield was around 1.60%. Bonds retreated in the US on speculation the Federal Reserve may have to speed up policy tightening to fight price pressures. Stronger-than-expected New York manufacturing data added to the case for an earlier interest-rate liftoff.
Markets continue to evaluate the risk that policy makers are erring by treating elevated price pressures as transitory. Ex-New York Fed leader William Dudley and former Richmond President Jeffrey Lacker suggested that the Fed should accelerate tapering. Bank of England Governor Andrew Bailey said he’s “very uneasy about the inflation situation.”
“We do still see quite an
accommodative fiscal and monetary policy continuing throughout 2022,” Sarah Shaw, chief investment officer at asset manager 4D Infrastructure, said in a briefing. “Should inflation prove to be more permanent or higher than expected, then central bank action is inevitable.”
This week’s focus will be on consumer strength, with Tuesday’s US retail sales data poised to show an acceleration. Industry giants such as Walmart Inc. and Home Depot Inc. will also unveil their quarterly results.
Meanwhile, there are more signs that an announcement about US President Joe Biden’s pick to head the Federal Reserve is due soon. Both current Chair Jerome Powell and Fed Governor Lael Brainard have been
interviewed for the top job.
Elsewhere, Elon Musk exercised options and sold more Tesla Inc. shares, continuing a streak of sales that helped tank the stock.
Oil rises as investors wait to see if the Biden administration will tap the crude reserves. Gold pushed higher, while Bitcoin slipped to trade below $61,000 amid a broad retreat in cryptocurrencies.
S&P 500 futures were steady as of 6:57 am in London and the S&P 500 was little changed.
While Nasdaq 100 futures were steady, the Nasdaq 100 was little changed and Japan’s Topix index rises 0.1%.
While Australia’s S&P/ASX 200 Index falls 0.7%, South Korea’s Kospi shed 0.1% and Hong Kong’s Hang Seng Index rises 1.1%. While China’s Shanghai Composite Index falls 0.3%, Euro Stoxx 50 futures rises 0.1%.
The Japanese yen traded at 114.18 per dollar and the offshore yuan was at 6.3752 per dollar, up 0.1%. The Bloomberg Dollar Spot Index falls 0.1% and the euro was at $1.1378.
While the yield on 10-year Treasuries was at 1.60%, down about two basis points, Australia’s 10-year bond yield climbed seven basis points to as much as 1.83%.
West Texas Intermediate crude was at $81.50 a barrel, up 0.8% and gold was at $1,865.30 an ounce, up 0.1%.