13th April 2021

Stocks erase gains, US futures fall as yields rise

Asian stocks erased their gains on Tuesday and US equity futures fell as traders wait for inflation data, a Treasury auction and corporate earnings to assess the market outlook. Bond yields and the dollar were up.

Shares fell in China, where concerns over the financial health of a key bad debt manager soured spirits. The data showed an increase in China's trade, although export growth did not meet March forecasts. US stock futures fell after the S&P 500 fell back from an all-time high. European contracts were stable.

The cost of insuring Asia's investment-grade bonds rose after a record rise in debt yields from state-owned bad debt manager China Huarong Asset Management Co. and the 10-year notes drew decent demand.

While Chinese trade data indicated that a global recovery from the pandemic is coming, stocks are unsteadily close to record levels due to spikes in Covid-19 cases and uneven vaccine launches. Concern about rising borrowing costs has lessened due to central bank assurances that interest rates will remain low, but inflation risk remains in focus US consumer price data is due Tuesday.

"It's not too late to focus on relational trading," Suresh Tantia, Senior Investment Strategist at Credit Suisse. "Sectors that are more exposed to cyclical recovery and inflation will outperform growth stocks in the next three to six months."

Separately, Treasury Secretary Janet Yellen will refuse to name China as a currency manipulator in her first semi-annual currency report, according to people familiar with the matter, allowing the United States to avoid a new confrontation with Beijing.

Oil was trading at about $ 60 a barrel. Bitcoin rose again above $ 60,000 before listing on the largest cryptocurrency market in the US.