published Oct 22, 2018, 1:22:54 AM, by Adam Haigh and Andreea Papuc
(Bloomberg) —

Stocks and U.S. futures erased losses and European contracts advanced as Chinese equities built on a Friday rally after calls for calm from the country’s top finance officials. The dollar and Treasuries dipped.

The Shanghai Composite Index surged more than 4 percent, set for its biggest gain since March 2016, buoyed by verbal support from authorities that lifted stocks at the end of last week from a four-year low, and plans to cut personal income taxes to support an economy showing strains from the trade war. Chinese President Xi Jinping vowed “unwavering” support for the country’s private sector. Stocks also advanced in Hong Kong and wiped earlier losses in Japan and South Korea. The euro strengthened.

Stocks are coming off the back of four straight weeks of losses in the Asia-Pacific region, with Chinese shares still in a bear market and the trade war not letting up. White House economic adviser Larry Kudlow accused China of doing “nothing” to defuse trade tensions ahead of a likely meeting between President Donald Trump and President Xi Jinping at the G20 in Argentina next month, according to the Financial Times. Investors are now worrying that the effect of tariffs will start cropping up in U.S. company earnings amid the lack of any prospect for a resolution.

“All sides are digging deeper in concrete and that’s a very dangerous thing; we’re going to see earnings that may start to reflect it,” David Kotok, chairman and chief investment officer at Cumberland Advisors, told Bloomberg Television. “This is the first quarter where it might become visible in some of these companies.”

Earnings from Amazon, Alphabet, Microsoft and Intel are all due this week.

In Italy, bond futures opened higher and stocks may rally Monday after a ratings decision by Moody’s Investors Service removed the immediate threat of a downgrade to junk. Over in the U.S., the week will provide insights on the growth picture from GDP data, and potentially some clues into Federal Reserve thinking, with new vice chairman Richard Clarida delivering his first major address.

Terminal readers can read more in our Markets Live blog.

Here are some key events coming up this week:

Earnings season roles on with notable highlights including Amazon.com, Alphabet, Intel, Verizon, Microsoft, Twitter, McDonald’s, UBS, Deutsche Bank, Barclays, Total, United Technologies, Caterpillar, Halliburton and Linde. Monetary policy decisions are due in Indonesia, Sweden and Canada. European Central Bank policy makers could on Thursday confirm that asset purchases will end this year, reiterating its pledge to keep interest rates at record lows through summer 2019. President Mario Draghi will hold a press conference. U.S. gross domestic product growth may have slowed in the third quarter, yet remained near its best pace since mid-2015, according to forecasts ahead of Friday’s release. GDP is estimated at a 3.3 percent annualized pace, less than the 4.2 percent second-quarter rate.

These are the main moves in markets:

Stocks

Japan’s Topix index rose 0.2 percent at the 3 p.m. close in Tokyo. Hong Kong’s Hang Seng Index advanced 2.2 percent. Shanghai Composite Index climbed 4.1 percent. Australia’s S&P/ASX 200 Index dipped 0.6 percent. S&P 500 Index futures nudged 0.2 percent higher. The S&P 500 fell less than 0.1 percent Friday. FTSE 100 Index futures rose 0.1 percent as of 7:07 a.m. in London.

Currencies

The yen fell 0.1 percent to 112.68 per dollar. The offshore yuan held at 6.9338 per dollar. The Bloomberg Dollar Spot Index fell 0.1 percent. The euro bought $1.1533.

Bonds

The yield on 10-year Treasuries nudged 3.20 percent. Australia’s 10-year government bond yields rose about two basis points to 2.70 percent.
Commodities

West Texas Intermediate crude rose 0.3 percent to $69.34 a barrel. Gold added 0.1 percent to $1,227.08 an ounce.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net ;Andreea Papuc in Sydney at apapuc1@bloomberg.net To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net Cormac Mullen, Ravil Shirodkar
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