Asian stocks were mixed Wednesday and U.S. equity futures were steady as traders braced for a faster withdrawal of Federal Reserve stimulus and evaluated signs of slowing Chinese economic growth.

Japanese shares gained while China and Hong Kong fluctuated. Chinese data ranging from new home prices to investment and retail sales suggested slowing growth amid a deepening property market slump and Covid disruptions.

Meanwhile, initial lab findings indicated that China’s Sinovac shot — one of the most widely used in the world — doesn’t provide sufficient antibodies to neutralize the omicron virus variant. Some 2.3 billion doses of the vaccine have been administered, mostly in China and the developing world.

U.S.-China tension also continues to bubble: the Biden administration is considering imposing tougher sanctions on Semiconductor Manufacturing International Corp., China’s largest chipmaker. The Financial Times reported the U.S. will add eight more Chinese companies to an investment blacklist.

S&P 500, Nasdaq 100 and European futures edged up. Treasury yields and the dollar pared gains. Technology shares led a Wall Street drop Tuesday as investors soured on more richly valued stocks ahead of the Fed policy decision.

The Fed on Wednesday is set to unveil a quicker tapering of bond purchases, paving the way for interest-rate hikes next year as high inflation rattles the economy. The mix of intense price pressures — U.S. producer-price inflation hit a record of almost 10% — diminishing central bank support and omicron uncertainty is testing markets. “We expect the markets to be volatile primarily because of the back and forth on the Covid news” and “worries again about inflation,” Rebecca Felton, RiverFront Investment Group senior market strategist, said on Bloomberg Television. “High valuations and uneven data are probably what we are going to see for the next couple of months.”

Elsewhere, oil fell for a third day. The International Energy Agency said the global market had already returned to surplus. Moreover, mobility curbs to tackle omicron risk hurting demand. 

Virus Curbs

The World Health Organization is concerned omicron is being dismissed as mild, even as it spreads faster than any previous Covid-19 strain. Italy, Scotland and the Netherlands are tightening restrictions, while South Korea is strengthening social-distancing measures.

The flattening in the U.S. Treasury yield curve this year could be pointing to a more challenging economic period ahead amid the panoply of risks.

“The yield curve is kind of sniffing out a policy mistake,” Nancy Tengler, chief investment officer at Laffer Tengler Investments Inc., said on Bloomberg Television. The long end of the curve “is forecasting slowing growth beyond what we expect to see next year” and the Fed erred by failing to begin tapering stimulus sooner, she said.

Meanwhile, a bill to raise the U.S. debt ceiling by $2.5 trillion headed to President Joe Biden for his signature after being cleared by lawmakers.

Here are some key events this week:

• China releases November industrial output, retail sales data, Wednesday.
• Fed rate decision, Wednesday.
• U.S. business inventories, retail sales, empire manufacturing, Wednesday.
• BOE rate decision, Thursday.
• ECB rate decision, Thursday.
• U.S. housing starts, initial jobless claims, industrial production, Thursday.
• BOJ monetary policy decision, Friday.
• S&P Dow Jones Indices quarterly rebalance effective after markets close, Friday.
• “Quadruple witching” day in the U.S. market, when options and futures on indexes and equities expire, Friday.

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 6 a.m. in London. The S&P 500 fell 0.8%
• Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 1%
• Japan’s Topix index rose 0.5%
• Australia’s S&P/ASX 200 index shed 0.7%
• South Korea’s Kospi index lost 0.1%
• Hong Kong’s Hang Seng index was steady
• China’s Shanghai Composite index fell 0.1%
• Euro Stoxx 50 futures increased 0.2%

Currencies

• The Japanese yen was at 113.73 per dollar
• The offshore yuan was at 6.3709 per dollar
• The Bloomberg Dollar Spot Index fell 0.1%
• The euro was at $1.1272

Bonds

• The yield on 10-year Treasuries fell one basis point to 1.43%
• Australia’s 10-year bond yield rose two basis points to 1.56%

Commodities

• West Texas Intermediate crude fell 1.4% to $69.72 a barrel
• Gold was at $1,769.87 an ounce

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Source By: https://www.bloomberg.com/news/articles/2021-12-14/asia-stocks-set-for-mixed-open-in-countdown-to-fed-markets-wrap