Stocks struggled for traction in Asia on Tuesday as a global bounce from a bear market stalled amid ongoing worries about high inflation and slowing economic growth.

An Asian equity index fell for the first session in four. Chinese tech shares were among the weaker performers on concerns that investors may look to take profits after a strong rally.

US and European equity futures dipped following losses for the S&P 500 and Nasdaq 100 on Monday. Institutional portfolio rebalancing at month- and quarter-end may also be affecting trading flows.

Caution in the Asian session was evident in a stronger yen and a climb in Treasuries that left the 10-year yield around 3.17%. Crude rose past $110 a barrel — Libya and Ecuador flagged potential output cuts on political unrest.

Rallies in risk assets have proved fleeting this year as higher borrowing costs to fight inflation restrain economic activity. Some analysts argue still-bullish earnings estimates are next in line for a reality check.

Earnings revisions are a risk with the US economy set to slow next year, though China emerging from Covid strictures could act as a global buffer, according to Lorraine Tan, Morningstar director of equity research.

“You got a US slowdown in 2023 in terms of growth, but you have China hopefully coming out of its lockdowns,” Tan said on Bloomberg Radio.

The People’s Bank of China pledged to keep monetary policy supportive to help the nation’s economy. It signaled that stimulus would likely focus on boosting credit rather than lowering interest rates. 

In the Bavarian Alps, Russia’s war in Ukraine and limiting its profits from rising energy prices have been among the main topics of discussion at a Group of Seven summit.

G-7 leaders are set to instruct ministers to explore implementing a price cap on Russian gas. The leaders are also expected to mention a mechanism to cap prices on Russian oil in the final communique.

What to watch this week:

• San Francisco Fed President Mary Daly is interviewed by LinkedIn’s chief economist, Tuesday
• US GDP, Wednesday
• ECB President Christine Lagarde, Federal Reserve Chair Jerome Powell, BOE Governor Andrew Bailey and Cleveland Fed President Loretta Mester due to speak at ECB event, Wednesday
• St. Louis Fed President James Bullard speaks, Wednesday
• China PMI, Thursday
• US personal income, PCE deflator, initial jobless claims, Thursday
• Eurozone CPI, Friday
• US construction spending, ISM Manufacturing, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 5 a.m. in London. The S&P 500 fell 0.3%
• Nasdaq 100 futures lost 0.2%. The Nasdaq 100 fell 0.8%
• Japan’s Topix index rose 0.5%
• Australia’s S&P/ASX 200 Index rose 0.7%
• South Korea’s Kospi index added 0.1%
• Hong Kong’s Hang Seng Index fell 0.9%
• China’s Shanghai Composite Index fell 0.1%
• Euro Stoxx 50 futures shed 0.5%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro was at $1.0582
• The Japanese yen traded at 135.31 per dollar, up 0.1%
• The offshore yuan was at 6.6951 per dollar

Bonds

• The yield on 10-year Treasuries fell about three basis points to 3.17%
• Australia’s 10-year bond yield fell four basis points to 3.73%

Commodities

• West Texas Intermediate crude rose 1.2% to $110.87 a barrel
• Gold was at $1,826.21 an ounce, up 0.2%

SOURCE:- bloomberg