Stocks steady

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SYDNEY- Asian share markets were mixed on Monday as Israel’s push into Gaza stirred fears of a wider conflict ahead of central bank meetings in the United States, Britain and Japan, the latter of which might see a policy tightening.

The earnings season also continues with Apple, Airbnb, McDonald’s, Moderna and Eli Lilly & Co among the many reporting this week. Results so far have been underwhelming, contributing to the S&P 500’s retreat into correction territory at 4,117

“The price action is bad as SPX could not defend a key 4,200 level; risk is it heads to the 200-week moving average of 3,941 before a trading rally,” BofA analysts said.

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Early on Monday, S&P 500 futures had edged up 0.3 percent  to 4,151, while Nasdaq futures added 0.5 percent . EUROSTOXX 50 futures slipped 0.2 percent  and FTSE futures were flat.

Risk appetite was dulled by Israel’s push to surround Gaza’s main city in a self-declared “second phase” of a three-week war against Iranian-backed Hamas militants.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2 percent , having hit a one-year low last week. Chinese blue chips firmed 0.1 percent.

China Evergrande Group’s shares fell 20 percent  on Monday as Hong Kong’s High Court hears a winding-up petition against the embattled property developer, nearly two years after it defaulted on its debts.

Japan’s Nikkei fell 1.1 percent  amid speculation the Bank of Japan (BOJ) might tweak its yield curve control (YCC) policy after its two-day policy meeting wraps up on Tuesday.

Many analysts expect the central bank will lift its inflation forecast to 2.0 percent , but are unsure whether it will finally abandon YCC in the face of market pressure on bonds.

“Remaining uncertainty about the wage outlook, combined with stresses in global bond markets could prompt the BOJ to err on the side of caution, making our view that YCC will be scrapped a very close call,” said analysts at Barclays.

“The BOJ could still opt to revise policy but less drastically, perhaps by raising the ceiling for 10-year yields as it did in July.”

Abandoning YCC altogether would likely see Japanese bond yields rise and add to pressure on global markets already bruised by a vicious sell-off in US Treasuries.

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