Asian Stocks Set for Muted Open on U.S. Retreat: Markets Wrap

(Bloomberg) -- Asian stocks looked set for a muted open as swelling coronavirus infections across the U.S. weighed on risk assets. The pound pared losses as the U.K. agreed on further talks with the European Commission to address the impasse over a trade deal.

Futures slipped in Japan and Australia and edged higher in Hong Kong. S&P 500 contracts retreated after the benchmark dropped from an all-time high, led by energy and financial stocks, amid fears of restrictions as infections climb. The Nasdaq 100 closed higher for a ninth straight day, its longest winning streak in almost a year. Ten-year Treasury yields dropped back toward 0.9% as risk-off sentiment built up and the dollar strengthened against its major peers. Oil dropped and gold jumped more than 1%.

As coronavirus cases surge, markets are increasingly looking for a U.S. stimulus deal to be done, especially after last week’s disappointing jobless data. With Republican and Democratic negotiators struggling to reach an agreement on both a mammoth government spending bill and Covid-19 relief, lawmakers are set to postpone what had been a Friday night deadline for passing a bill.

Meanwhile, the U.S. announced sanctions Monday against 14 members of China’s National People’s Congress, the country’s rubber-stamp legislature, as the Trump administration tries to ratchet up pressure on Beijing over its crackdown on dissent in Hong Kong.

“Signs that traders have trimmed risk are there, with some focus on U.S. Covid trends,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note. Renewed focus on trade tensions and the ongoing Brexit negotiations, suggests “this selective mindset is just the market sitting on its hands waiting for the next shoe to drop.”

U.K. Prime Minister Boris Johnson will travel to Brussels for crisis talks with European Commission President Ursula von der Leyen as they try to break the deadlocked negotiations over a post-Brexit trade deal.

Here are some key events coming up:

• Thursday brings the European Central Bank policy decision and a press briefing from Christine Lagarde. Economists widely expect the central bank to increase and extend its pandemic bond-buying program.
• The U.S. Food and Drug Administration meets to discuss the vaccine made by Pfizer/BioNTech on Thursday. If the FDA authorizes emergency use, Health & Human Services Secretary Alex Azar said vaccine distribution could begin within 24 hours.

These are some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 8:04 a.m. in Tokyo. The S&P 500 fell 0.2% Monday.
• Nikkei 225 futures fell 0.5%.
• Australia’s S&P/ASX 200 Index futures fell 0.2%.
• Hong Kong’s Hang Seng Index futures rose 0.3%.

Currencies

• The yen strengthened 0.1% to 104.02 per dollar.
• The offshore yuan traded at 6.5201 per dollar.
• The Bloomberg Dollar Spot Index rose 0.2%.
• The euro dipped 0.1% to $1.2113.
• The pound dropped 0.4% to $1.3383.

Bonds

• The yield on 10-year Treasuries fell four basis points to 0.93%.

Commodities

• West Texas Intermediate crude fell 1.2% to $45.71 a barrel.
• Gold strengthened 1.4% to $1,865.14 an ounce.

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