Asia Stocks Dip on Virus Spike; Gold Holds Gain: Markets Wrap

(Bloomberg) -- Most Asian stocks slipped Tuesday amid concern the escalating pandemic will crimp a nascent economic recovery, with traders also braced for key U.S. runoff elections. The dollar fell and gold held gains.

Shares dipped in Japan, Hong Kong and Australia. S&P 500 contracts fluctuated after the benchmark suffered its worst drop at the start a year since 2016. The Cboe Volatility Index, or VIX, surged the most since October. Treasuries were steady. The pound held most of the losses sparked by England’s third lockdown.

In a surprise U-turn, the New York Stock Exchange said it no longer plans to delist China’s three big telecommunication companies. The move comes just days after the exchange said it would remove China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd. to comply with a U.S. executive order. Shares in the companies rallied.

Tuesday’s runoff elections in Georgia are set to determine whether Democrats take effective control of Congress, boosting their ability to implement President-elect Joe Biden’s agenda. Traders are weighing scenarios such as the possibility of greater U.S. fiscal stimulus, higher taxes and more regulation if such a “blue wave” materializes.

Meanwhile, global coronavirus infections topped 85 million. Daily cases in the U.S. jumped to a record of nearly 300,000 following the New Year holiday, and an easier-to-spread variant could intensify the surge. These trends are tempering some of the enthusiasm sparked by the rollout of vaccines.

“The first quarter will no doubt be tough; the spread has been horrific throughout the festive period and restrictions are being tightened and extended,” said Craig Erlam, senior market analyst at Oanda. “The toll on the economy will be significant but, thanks to the vaccine, consigned mostly to the first quarter.”

Elsewhere, oil remained lower as OPEC+ talks were unexpectedly suspended due to a disagreement over whether to raise output in February. Bitcoin steadied following a plunge of as much as 17% on Monday.

What to watch this week:

• On Tuesday, the state of Georgia holds a run-off election for two U.S. Senate seats that will decide control of the chamber.
• U.S. Congress meets to count electoral votes and declare the winner of the 2020 Presidential election Wednesday.
• FOMC minutes out Wednesday.
• U.S. unemployment report for December is due Friday.

These are some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 1 p.m. in Tokyo. The S&P 500 decreased 1.5%.
• Japan’s Topix index fell 0.3%.
• Australia’s S&P/ASX 200 Index dropped 0.4%.
• South Korea’s Kospi index lost 0.1%.
• Shanghai Composite was little changed.
• Hong Kong’s Hang Seng Index fell 0.3%.

Currencies

• The yen was at 103.03 per dollar.
• The offshore yuan was at 6.4327 per dollar, up 0.2%
• The Bloomberg Dollar Spot Index declined 0.2%.
• The euro added 0.2% to $1.2272.
• The pound traded at $1.3584.

Bonds

• The yield on 10-year Treasuries climbed about one basis point to 0.92%.
• Australia’s 10-year bond yield fell about four basis points to 0.97%.

Commodities

• West Texas Intermediate crude was little changed at $47.59 a barrel.
• Gold fell 0.1% to $1,941.69 an ounce.

©2021 Bloomberg L.P.