(Bloomberg) -- Asia stocks are set to start the week under pressure with traders keeping an eye on China Evergrande Group's debt crisis and the pace of economic recovery. The euro pared gains on a close German election.
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Futures fell in Japan, where the ruling coalition chooses a new leader this week who will probably be the next prime minister. Contracts were little changed in Australia and fell in Hong Kong earlier. U.S. contracts were little changed. The Nasdaq Golden Dragon China Index -- which tracks some of the Asian nation's largest firms listed in the U.S. -- sank Friday. The S&P 500 edged up to eke out a weekly gain.
Investors will also be watching bond yields. Ten-year Treasury yields broke through the top of a range that's held since mid-July, surpassing 1.40% and ending the week at 1.45% after hawkish messages last week from the Federal Reserve and the Bank of England. The dollar was mixed versus peers.
The euro pared a gain versus the dollar as the German election failed to produce a clear winner, raising investor concerns of a prolonged decision on the leadership of Europe's biggest economy. Olaf Scholz of the Social Democrats inched ahead of Chancellor Angela Merkel's conservatives.
Bitcoin was stable early Monday, trading above $43,000. Digital currencies plunged Friday as China intensified its push to rein in crypto speculation and mining.
Global equities notched their first weekly advance in three as traders shrugged off concerns over a Federal Reserve pullback in stimulus, contagion risks from Evergrande and Beijing's latest crackdown on cryptocurrencies. Still, risks remain including a renewed spike in Covid-19 cases, inflationary pressures and central banks becoming less dovish.
"Global fears around contagion from Evergrande have receded a bit but it's too early to sound the all clear," Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note. "Shares remain vulnerable to short-term volatility."
Fed Bank of Cleveland President Loretta Mester said she supported starting to dial back bond purchases in November. Her Kansas City counterpart Esther George said "the criteria for substantial further progress have been met," referring to the central bank's taper test.
Amid Evergrande developments, China's housing regulator has stepped up oversight of the embattled developer's bank accounts to ensure funds are used to complete housing projects and not diverted to pay creditors.
Here are some events to watch this week:
Fed Chairman Jerome Powell, Treasury Secretary Yellen to testify at a Senate Banking Committee hearing Tuesday
European Central Bank President Christine Lagarde speaks Tuesday
Japan's ruling party votes to elect leader, Wednesday
Central bank chiefs Andrew Bailey (BOE), Haruhiko Kuroda (BOJ), Christine Lagarde (ECB) and Jerome Powell (Fed) participate in an ECB Forum panel, Wednesday
House Financial Services Committee hearing on the Fed, Treasury's pandemic response, Thursday
China Caixin manufacturing PMI, non-manufacturing PMI, Thursday
U.S. manufacturing PMI, Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
S&P 500 futures rose 0.2% as of 7:18 a.m. in Tokyo. The S&P 500 rose 0.2%
Nasdaq 100 futures were little changed. The Nasdaq 100 was little changed
Nikkei 225 futures fell 0.6%
Australia's S&P/ASX 200 Index futures were little changed
Hang Seng Index futures fell 0.8% earlier
The Japanese yen was at 110.78 per dollar
The offshore yuan was at 6.4623 per dollar
The Bloomberg Dollar Spot Index rose 0.3% Friday
The euro traded at $1.1720
The yield on 10-year Treasuries advanced two basis points to 1.45%
West Texas Intermediate crude rose 0.6% to $74.41 a barrel
Gold was at $1,750.41 an ounce
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