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U.S. Futures Rise With China Stocks; Japan Slips: Markets Wrap

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(Bloomberg) — U.S. equity futures rose with China’s stocks and the yuan, taking encouragement from pledges to support the nation’s economy. Japanese equities declined after a deep contraction in GDP.

China’s CSI 300 Index recouped all of its losses since trading resumed after the Lunar New Year break, with the central bank lowering one of its interest rates and saying it would support firms that can restart production as soon as possible. European futures also climbed, and the strong China open helped limit losses in Japan. Treasuries aren’t trading due to a U.S. holiday. The yuan rose, as did the Aussie. Otherwise, Asian markets saw a mixed start to the week.

China also over the weekend unveiled plans for reducing corporate taxes and fees, and letting banks run up more non-performing loans. Bloomberg Economics estimated China’s economy has been running at just 40% to 50% capacity in the last week, underscoring the short-term damage done by the coronavirus-linked shutdowns of large swathes of the country.

Hubei, the province at the epicenter of the outbreak, Monday reported 1,933 new cases, slightly higher than a day earlier. Deaths were reported in France and Taiwan over the weekend, bringing to five the number of fatalities outside mainland China.

“If the Chinese economy does recover and you’ve added all this fiscal and monetary stimulus into it as well, the situation could be that you have much stronger emerging markets into the second half” of 2020, Sunny Bangia, a fund manager at Antipodes Partners Ltd., said on Bloomberg TV in Sydney. “A lot depends on how this virus gets contained and if it can morph into something more minor.”

Japan’s Topix Index slid as much as 1.5% after the worst nominal GDP performance since Prime Minister Shinzo Abe took office. In Singapore, the government Monday cut its growth forecasts, citing uncertainty over the length and severity of the virus outbreak. The country is expected to unveil a large stimulus package to mitigate the hit from the epidemic.

Here are some key events coming up:

Earnings season rolls on with results from companies including: BHP Group, Glencore Plc, HSBC Holdings Plc, Walmart Inc. and Deere & Co.U.S. celebrates Presidents’ Day on Monday, with financial markets shut.Minutes of the most recent Federal Reserve meeting are published on Wednesday.Indonesia is expected to cut interest rates on Thursday, following emerging-market peers from Brazil to South Africa which have lowered borrowing costs already this year.Group of 20 finance ministers and central bank chiefs are scheduled to meet Feb. 22-23 in Riyadh, Saudi Arabia, and are expected to discuss efforts to support growth amid the coronavirus threat.

These are the main moves in markets:

Stocks

Japan’s Topix index lost 0.9% at the 3 p.m. close in Tokyo.Futures on the S&P 500 added 0.2%. The index rose 0.2% on Friday.Hong Kong’s Hang Seng Index rose 0.6%.The Shanghai Composite Index added 2%.Australia’s S&P/ASX 200 Index slipped 0.1%.South Korea’s Kospi index was little changed.Euro Stoxx 50 contracts rose 0.3%.

Currencies

The yen was flat at 109.84 per dollar.The offshore yuan added 0.2% to 6.9772 per dollar.The Australian dollar rose 0.3% to 67.31 U.S. cents.The euro bought $1.0839.

Bonds

The yield on 10-year Treasuries slid three basis points to 1.58% on Friday. Futures were down slightly Monday.Australia’s 10-year yield ticked held at 1.05%.

Commodities

West Texas Intermediate crude ticked up 0.2% to $52.16 a barrel.Gold was little changed at $1,582.74 an ounce.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net;Andreea Papuc in Sydney at apapuc1@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Joanna Ossinger

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©2020 Bloomberg L.P.

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