Stocks, Futures Mixed; Dollar and Treasuries Rise: Markets Wrap.

 

Jim Paulsen at Leuthold Weeden Capital Management discusses the factors behind his bullish call for the S&P 500.

Stocks were mixed and U.S. futures fluctuated on Thursday in the wake of another Wall Street all-time high on light volumes in the final days of the year. Treasury yields trimmed an advance.

The Stoxx Europe 600 gauge was little changed at the open, with technology shares bouncing back to pare some of Wednesday’s drop. Contracts on the S&P 500 and Nasdaq 100 wavered after the S&P 500 eked out a gain to hit its 70th record close of the year on Wednesday.

The 10-year Treasury yield pared an advance but stayed above its 50-day moving average. European bonds were mostly steady after Wednesday global sovereign-bond retreat. A dollar gauge rose. Iron ore halted a three-day decline and resurfaced above $120 a ton on potential support from restocking by China’s steel mills. Crude oil was steady. 

As the year draws to a close, investors are contemplating the implications of the fast-spreading omicron coronavirus variant, decreasing stimulus and elevated inflation stoked by supply-chain bottlenecks. Key questions include whether Treasury yields will push higher and how much impetus is left in the equity bull market.


“Despite global surges in Covid cases, the markets are reflecting the new reality that Covid is here to stay albeit more on our terms than its,” Kevin Philip, managing director at Bel Air Investment Advisors, said in an email. Next year, “we are facing less of a Covid-influenced world, and a return toward normalcy,” he said. 

The number of Covid-19 cases soared 32% to a record 1.73 million on Wednesday, marking the third day in a row with more than a million new infections worldwide. Cathay Pacific Airways plans to scrap Hong Kong flights as the city tightens quarantine rules for aircrew. 

Still, countries including Italy and Australia are dialing back their Covid curbs in an effort to keep essential services running, support their economies and allow people to connect. More evidence is emerging that omicron may be less dangerous, particularly in vaccinated people, as virus deaths in the U.S. declined.

China’s CSI 300 index climbed on expectations of more steps to bolster economic growth amid an extension of some personal income-tax breaks and calls for policy easing. In Hong Kong, artificial intelligence giant SenseTime Group Inc. jumped on its first day of trading. MSCI Inc.’s overall Asia-Pacific index edged lower. 

China’s battered property developers and regulatory crackdown are again in focus heading toward 2022. 

Developer Kaisa Group Holdings Ltd. faces an initial deadline for coupon payments totaling $154 million on two dollar bonds Thursday. A unit of China Evergrande Group plans to cut its stake in China Calxon Group Co. after failing to repay debt in time.

Elsewhere, Bitcoin extended its December retreat and was trading around $47,000.

What to watch this week:

  • U.S. initial jobless claims, Thursday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

  • The Stoxx Europe 600 rose 0.1% as of 8:20 a.m. London time
  • Futures on the S&P 500 were little changed
  • Futures on the Nasdaq 100 were little changed
  • Futures on the Dow Jones Industrial Average were little changed
  • The MSCI Asia Pacific Index fell 0.2%
  • The MSCI Emerging Markets Index fell 0.1%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%
  • The euro fell 0.3% to $1.1310
  • The Japanese yen fell 0.2% to 115.17 per dollar
  • The offshore yuan was little changed at 6.3726 per dollar
  • The British pound fell 0.2% to $1.3465

Bonds

  • The yield on 10-year Treasuries declined one basis point to 1.54%
  • Germany’s 10-year yield was little changed at -0.18%
  • Britain’s 10-year yield was little changed at 1.01%

Commodities

  • Brent crude fell 0.3% to $78.96 a barrel
  • Spot gold fell 0.3% to $1,799.86 an ounce
  • Credit by Bloomberg

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