Shares sobered by Fed warning, China acts on property

  • Fed’s Wallers Play CPI as Just a Number
  • Beijing extends asset support, COVID steps up
  • Biden to meet Xi at G20 meeting

SYDNEY/LONDON, Nov 14 (Reuters) – Stock markets continued last week’s rally in a more modest fashion on Monday after a top US central banker warned investors against being carried away by an inflationary number. Chinese stocks provided support for the country’s property sector. ,

A modest lapse on US inflation was enough to send two-year Treasury yields a 33 basis points dive for the week and the dollar to fall by nearly 4% – the fourth biggest since the era of free-floating exchange rates 50 years ago. weekly drop.

Although the resulting easing in US financial conditions was not entirely welcomed by the Federal Reserve, Governor Christopher Waller said on Sunday that it would take a string of soft reports for the bank to take its foot off the brakes.

Waller said the markets were well ahead of themselves on just one inflation print, though he acknowledged that the Fed may now start to think about hiking the slow.

Futures are betting heavily on a 4.25-4.5% increase in the half-point rate in December, and then some quarter-points to peak in the 4.75-5.0% range.

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The two-year yield fell to 4.39% on Friday after diving deeper to 4.29%.

Bruce Kasman, head of economic research at JPMorgan, said: “The downside of the CPI aligns with a wide range of indicators pointing to a decline in global inflation, which is likely to reduce monetary policy momentum at the Fed and elsewhere. should be encouraged.”

“This positive message needs to be tempered by the recognition that a fall in inflation will be too low for central banks to declare mission-complete, and more hardening is likely on the way.”

The benchmark European STOXX index rose 0.37% (.STOXX), and MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.73% after jumping 7.7% last week.

US markets looked set to open lower, with S&P E-Mini futures down 0.26%.

eyes on china

Dealers were also waiting to see if Chinese stocks could extend their larger rally amid reports regulators have asked financial institutions to extend more support to stressed property developers. read more

China’s real estate index (.CSI000952) jumped 3.5% in response. Blue chips (.CSI300) rose 1%, helped by a number of changes to China’s COVID restrictions, even as the country reported more cases over the weekend. read more

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Ray Attrill, Head of FX Strategy, said, “It is hard to see if the news is anything but negative from an economic point of view, but it is a sign of movement, however, in a zero COVID strategy, which is a market delight. swinging by.” at NAB.

Support for China’s property sector, which consumes large amounts of the metals, pushed copper to a five-month high. Three-month copper was up 0.3% at $8,519 a tonne by 0725 GMT on the London Metal Exchange (LME).

US President Joe Biden will meet in person with Chinese leader Xi Jinping on Monday for the first time since taking office, with US concerns over Taiwan, Russia’s war in Ukraine and North Korea’s nuclear ambitions topping his agenda. .

News of COVID regulations halted a short-covering bounce in the yuan, adding broader pressure to the dollar as yields tumbled. The yuan strengthened 1.4% on Monday – the biggest such move since 2005.

The dollar index fell a fraction on Monday at 106.69, still lower than last week’s top of 111.280.

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The euro rose to $1.0308 after climbing 3.9% last week, while the dollar settled at 139.56 yen after falling 5.4% last week.

The dollar lost almost as much as the Swiss franc, in part by warnings from the Swiss National Bank that it would use rates and currency purchases to reduce inflation.

Sterling was eased back to $1.1755 ahead of the British chancellor’s autumn statement on Thursday, where he is expected to hike tax rates and cut spending.

Cryptocurrencies remained under pressure as at least $1 billion of customer funds were reported missing from the collapsed crypto exchange FTX.

Bitcoin recovered 2.9% to $16,785, a drop of nearly 22% from the previous week.

Oil prices fell on Monday from earlier gains, after hopes of an increase in demand from China were offset by a stronger US dollar. Brent crude futures were down 32 cents, or 0.3%, at $95.67 a barrel by 0725 GMT after falling 1.1% on Friday

Reporting by Wayne Cole and Lawrence White; Editing by Sri Navaratnam, Kenneth Maxwell, William McLean

Our Standards: Thomson Reuters Trust Principles.

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