1. U.S. Futures Recovers Decline as Europe Shares Gain
U.S. stock futures pared losses in early trading, while European stocks climbed and Treasuries slid. Trading was mixed across asset classes as investors took stock of recent bond market volatility and China’s top banking regulator said he’s “very worried” about risks from bubbles in global financial markets. Benchmark Treasury yields added two basis points to 1.44%. In the U.K., the FTSE 100 Index rose ahead of the government’s annual budget report on Wednesday. Oil futures in New York traded near $60 a barrel, with investors looking ahead to the OPEC+ meeting later this week.
Futures on the S&P 500 Index declined 0.2% as of 12:45 p.m. London time.
The Stoxx Europe 600 Index climbed 0.6%.
The MSCI Asia Pacific Index fell 0.2%.
The MSCI Emerging Market Index increased by 0.1%.
2. China’s Focus on Bubble Risks a Warning Sign for Stock Market
For investors fretting about an end to the era of cheap and plentiful debt, China just provided another reason to worry. The nation’s top banking regulator jolted markets on Tuesday with a warning about the need to reduce leverage amid the rising risk of bubbles globally and in the local property sector. The impact on Chinese stocks was swift: the CSI 300 Index fell as much as 2.1% to lead declines in Asia. Central banks around the world are facing the challenge of when and how to pare back stimulus as economies recover from the pandemic. Deleveraging has particular resonance in China, where it is a key priority of President Xi Jinping due to the size of the nation’s debt mountain.
3. OPEC Production Plunges as Saudis Deliver Extra Oil Cutbacks
OPEC’s crude production plunged last month as Saudi Arabia delivered extra cutbacks intended to clear the remnants of a global supply glut. The output from the group fell by 920,000 barrels a day — the biggest drop in eight months — to 24.87 million a day. As promised, the kingdom slashed its production by almost 1 million barrels a day, or about 11%. The Organization of Petroleum Exporting Countries and its allies have been constricting oil supplies since the pandemic crushed demand almost a year ago. To disperse the lingering stockpile surplus, the Saudis pledged extra reductions during February and March. Their efforts have paid off, reviving oil prices back to pre-crisis levels above $60 a barrel.
4. Canada’s Economy Bounding Into 2021 on Inventory Build-Up
Canada’s economy showed surprising strength as businesses stocked up on inventories, even as a wave of Covid-19 restrictions held back consumption. Gross domestic product expanded at a 9.6% annualized rate in the fourth quarter. The GDP was on track to grow 0.5% in January, defying expectations for a contraction. The biggest contribution to the GDP gain was businesses rebuilding inventory levels after two successive quarters of drawing down stocks, a good sign. That helped offset a very weak end of the year for consumer spending, which recorded an unexpected drop during the quarter.
5. Ambani’s Jio Biggest Buyer in $11 Billion India Airwave Sale
Billionaire Mukesh Ambani-led Reliance Jio emerged as the top bidder in India’s $11 billion airwaves auction, as the country’s largest wireless operator seeks to cement its competitive edge over rivals. Reliance Jio bought airwaves worth 571.23 billion rupees ($7.8 billion) of the total 778.2 billion rupees raised in the latest spectrum auction, India’s Telecom Secretary Anshu Prakash told reporters in New Delhi on Tuesday. Rival Bharti Airtel Ltd. spent $2.6 billion while Vodafone Plc’s India unit acquired spectrum worth 19.9 billion rupees.
6. Ting Hsin Weighing $800 Million IPO of KFC’s Chinese Rival
Ting Hsin International Group, the Taiwanese food company behind the Master Kong brand, is weighing a Hong Kong initial public offering of its restaurant business in mainland China. The firm has invited banks to pitch for a role on the listing. The Taiwanese company may include restaurant chains Dicos, a prominent fried chicken brand, and Master Kong Chef’s Table, which specializes in Taiwan-style beef noodles, in the Hong Kong listing. Dicos, a local rival to Yum China Holdings Inc.’s KFC, operates about 2,600 outlets across China and has more than 70,000 employees serving 600 million customers annually.
7. Hong Kong Explores SPAC Listings to Get In on Deal Boom
Hong Kong is exploring allowing the listing of special purpose acquisition companies, jumping into a market that has sparked a frenzy of U.S. dealmaking. The government has asked the Hong Kong exchange and the city’s financial regulator to look into having SPACs list, according to Financial Secretary Paul Chan. The aim is to allow the new fundraising arrangements while upholding investors protections. The listing of SPACs has propelled IPO deals in the U.S. to the fastest pace in 12 years so far this year, with the vehicles comprising 77% of the announced offerings. The city’s main Asian competitor, Singapore, is looking at opening up for SPACs.
8. No New Strain in UK; Vaccination Picks up Pace: Virus Update
U.K. Health Secretary Matt Hancock told the House of Commons that there is no information to suggest the Brazil variant has spread further in the country. Chancellor Angela Merkel is pushing for a broad extension of Germany’s lockdown until March 28 with a partial easing of some restrictions. Italy may seek more stimulus spending, while the number of patients in the Czech Republic hospitalized in serious condition reached a record. In Asia, registrations for vaccinations in India jumped after the prime minister got his shot, while the Philippines rejected a proposal to have “influencers” undergo public inoculations. China set a goal to vaccinate 40% of its population by the end of June.
9. Dubai Real Estate Market May Bottom Out Next Year: S&P
The property market in Dubai may “bottom out” next year after weathering a tough 2020, according to S&P Global Ratings. “We already had a supply and demand imbalance in the market even before the pandemic, and after Covid-19 the situation just got worse,” an S&P analyst told on Tuesday. Prices of residential and office spaces in the city are expected to “somewhere bottom out in 2022,” she said. A property glut and faltering demand in the Middle East’s business hub have driven prices down by more than a third since the market peaked some seven years ago. The decline has been made worse by the coronavirus pandemic.
10. Wall Street Bullishness Is Becoming a Contrarian Sell Signal
Stock market optimism among Wall Street strategists has risen close to levels that signalled trouble for equities in the past. A Bank of America measure of their bullishness is near a level that historically has been bearish for stocks. The gauge assesses the average recommended allocation to equities by sell-side strategists and is very close to triggering a sell signal. “The last time the indicator was this close to ‘Sell’ was June 2007 after which we generally saw 12-month returns of minus 13%,” the strategists said, adding even current levels signal below-average equity returns over the next year. “We‘ve found Wall Street bullishness to be a reliable contrarian indicator.”
Curated from Bloomberg.com
