Asian Stocks Mixed After U.S. Rally to Record High: Markets Wrap

(Bloomberg) -- Asian stocks were mixed Friday after failing to harness a tailwind from the U.S., where the S&P 500 hit an all-time high amid optimism that economic growth will weather the omicron coronavirus outbreak.

Shares fell in Japan and China, while casino firms rallied in Hong Kong on favorable results from Macau license-renewal hearings. Volumes have thinned and many markets are closed or truncated on Christmas Eve.

Sentiment in the U.S. was helped by economic data that painted a picture of solid growth, and a U.K. study suggesting omicron infections are less likely to lead to hospitalization. But the research cautioned the fast-spreading variant may still produce a significant number of serious cases.

Commodity-linked currencies including Australia’s dollar dipped. Gold was near $1,809 an ounce. Bitcoin was trading around $51,000. There is no cash trading of Treasuries on Friday. They slipped along with a dollar gauge Thursday, while West Texas Intermediate crude pushed up toward $74 a barrel.  

A global stock gauge is up some 3% this month, illustrating the equity market’s resilience in the face of risks from the coronavirus and moves to tighten monetary policy to quell high inflation. A background of receding central bank liquidity support could test markets next year.

“We certainly favor value into 2022 over growth, and are much more on the short duration side both when we look at equities and fixed income,” said Cheryl Pate, portfolio manager at Angel Oak Capital Advisors LLC. 

She said on Bloomberg Television that U.S. inflation could move still higher and that the Federal Reserve faces a delicate balancing act to check price pressures while maintaining the economic recovery.

Inflation Dangers

Former Treasury Secretary Lawrence Summers warned of a testing period for the U.S. economy in coming years, with the risk of recession followed by stagnation. He said the Fed had been late to spot the dangers of inflation.

Omicron “will create some slowdowns in the economy, perhaps some slowdowns of production which could add to inflation pressures in the short term,” Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, said on Bloomberg Television. 

But that will fade and the economy will work its way through the situation, Christopher said.

U.S. Growth

The latest U.S. data showed that consumer sentiment improved, new home sales increased, durable goods orders beat forecasts and jobless claims signaled further labor market healing. But inflation-adjusted consumer spending stagnated, flagging risks from rapidly rising prices.

Elsewhere on the virus front, Merck & Co.’s Covid-19 pill was cleared by U.S. regulators, giving high-risk patients another at-home treatment option. 

But doubts continue to swirl about the effectiveness of the vaccine made by China’s Sinovac Biotech Ltd. -- one of the most widely used in the world -- against omicron following the latest laboratory study.  

United Airlines Holdings Inc. and Delta Air Lines Inc. are canceling around 200 Friday flights because of staff shortages linked to the spike in omicron cases.

What to watch this week:

• Friday: U.S. markets are closed. U.K. markets close earlier

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

• China’s Shanghai Composite index lost 0.7% as of 3 p.m. in Beijing
• Hong Kong’s Hang Seng index rose 0.1%
• Japan’s Topix index fell 0.1%
• South Korea’s Kospi added 0.5%
• Australia’s S&P/ASX 200 index increased 0.4%
• The S&P 500 index rose 0.6% on Thursday
• The Nasdaq 100 index climbed 0.8% on Thursday

Currencies

• The Bloomberg Dollar Spot Index fell 0.1% on Thursday
• The euro was at $1.1330
• The Japanese yen was at 114.39 per dollar
• The offshore yuan was at 6.3748 per dollar

Bonds

• The yield on 10-year Treasuries advanced four basis points to 1.49% on Thursday
• Australia’s 10-year yield fell one basis point to 1.58%

Commodities

• West Texas Intermediate crude rose 1.4% to $73.79 a barrel on Thursday
• Gold was at $1,808.55 an ounce

©2021 Bloomberg L.P.