(Bloomberg) — US equity-index futures gained on Thursday, led by the Nasdaq 100, following a rally in Asian technology stocks amid signs China is easing a regulatory crackdown.
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Futures on the tech-heavy Nasdaq rose more than 0.6% after the index slumped almost 3% in the previous two trading days. Contracts on the S&P 500 were up about 0.3%. Tencent Holdings Ltd. joined a rally in Asian gaming stocks Thursday after China green-lit its latest clutch of blockbuster titles, reinforcing hopes Beijing is relenting on measures that have weighed on the tech sector.
The tech rally was a small ray of light on the penultimate day of trading for the year, with investors focused on concerns about the spread of Covid-19 from China. The Stoxx Europe 600 index slipped, while equity benchmarks in Japan, China, Australia and South Korea fell on thin trading volume. The 10-year Treasury yield fell about three basis points and a gauge of the dollar declined.
Appetite for risk waned on news that the US would require inbound airline passengers from China to show a negative Covid-19 test prior to entry. In Italy, health officials said they would test arrivals from China after almost half of passengers on two flights from China to Milan were found to have the virus.
Hong Kong removed limits on gatherings and testing for travelers in a further unwinding of its last major Covid rules, offering a boost to the global economy but sparking concerns it would amplify inflation pressures and prompt US policy makers to maintain tight monetary settings.
China’s reopening “complicates the Fed’s job with respect to putting a little bit of a bid under oil prices, putting a little bit of a bid under inflation globally, to aggregate demand,” said Sameer Samana, senior global market strategist for Wells Fargo Investment Institute, on Bloomberg TV. “That’s going to be one of the biggest things that we’ll be watching in the first half.”
Data released Wednesday showed the Federal Reserve’s aggressive tightening policy has taken a toll on the housing market. US pending home sales fell for a sixth consecutive month in November to the second-lowest on record. Borrowing costs have roughly doubled since the start of the year and home sales have been declining for months.
Elsewhere in markets, oil dipped amid thin liquidity as investors weighed the fallout from a Russian ban on exports to buyers that adhere to a price cap.
“We expect the economy to slow materially or enter recession at some point in 2023,” wrote Nancy Tengler, CEO and chief investment officer at Laffer Tengler Investments.
“A severe recession would be bearish for stocks, yet given the resilience of the US economy and the tight labor market, we are expecting a slowdown or shallow and brief recession. That could allow stocks to rally in the second half of 2023,” she said.
Key events this week:
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US initial jobless claims, Thursday
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ECB publishes economic bulletin, Thursday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 fell 0.1% as of 9:21 a.m. London time
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S&P 500 futures rose 0.3%
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Nasdaq 100 futures rose 0.6%
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Futures on the Dow Jones Industrial Average rose 0.1%
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The MSCI Asia Pacific Index fell 0.6%
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The MSCI Emerging Markets Index fell 0.5%
Currencies
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The Bloomberg Dollar Spot Index fell 0.3%
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The euro rose 0.2% to $1.0638
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The Japanese yen rose 0.6% to 133.62 per dollar
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The offshore yuan rose 0.3% to 6.9768 per dollar
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The British pound rose 0.2% to $1.2044
Cryptocurrencies
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Bitcoin rose 0.3% to $16,562.7
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Ether rose 0.6% to $1,193.89
Bonds
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The yield on 10-year Treasuries declined three basis points to 3.85%
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Germany’s 10-year yield declined two basis points to 2.48%
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Britain’s 10-year yield advanced three basis points to 3.69%
Commodities
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Brent crude fell 2.1% to $81.47 a barrel
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Spot gold rose 0.4% to $1,810.81 an ounce
This story was produced with the assistance of Bloomberg Automation.
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