Stocks Steady Near Record Highs; Oil Extends Gains: Markets Wrap

(Bloomberg) -- The global equity rally took a breather in Asia Tuesday as investors mulled stimulus prospects and the impact of rising inflation expectations with stocks at record highs. Oil extended gains.

Stocks were little changed in Japan and Australia, and rose in South Korea. S&P 500 futures were little changed after U.S. shares rose for a sixth straight session. The benchmark closed at an all-time high spurred by fresh signs the Biden administration is committed to passing a sizable aid bill to address unemployment. An increase in vaccination numbers boosted optimism that the economy will take off later this year. Treasuries and the dollar were steady.

Commodities prices pointed to renewed optimism in the global economic recovery. Brent oil advanced above $60 a barrel for the first time in more than a year, after rallying on signs the global market is tightening and demand is improving. Bitcoin jumped to a record after Tesla Inc. bought $1.5 billion of the cryptocurrency.

Investors are taking comfort from vaccine rollouts and signs of progress on stimulus, though worries remain about stretched valuations. With inflation expectations near the highest since 2013, questions have also begun to be raised about when the so-called reflation trade in bonds could start to threaten equities.

“The vaccine roll-out programs certainly suggest that the reflation trade has legs but central banks seem to want to ensure that expectations are kept in check,” Jane Foley, head of foreign exchange strategy at Rabobank, said on Bloomberg TV. “This suggests a choppy ride.”

Here are some key events coming up:

• Earnings season continues with companies including Honda Motor, Cisco Systems, Societe Generale and L’Oreal.
• EIA crude oil inventory report comes Wednesday.
• Sweden will set monetary policy on Wednesday.
• Federal Reserve Chair Jerome Powell will speak on a webinar Wednesday.
• The U.S. consumer price index comes Wednesday.
• Lunar New Year public holidays begin in nations across Asia, with China breaking for a week.
• Bank of Russia’s policy decision comes Friday.

These are the main moves in markets

Stocks

• S&P 500 futures were little changed as of 9:05 a.m. in Tokyo. The S&P 500 Index increased 0.7%.
• Topix index rose 0.1%.
• Australia’s S&P/ASX 200 Index fell 0.2%.
• Kospi index rose 0.9%.
• Hong Kong’s Hang Seng Index futures rose 0.2% earlier.

Currencies

• The yen was at 105.20 per dollar.
• The offshore yuan was little changed at 6.4465 per dollar.
• The Bloomberg Dollar Spot Index was flat.
• The euro was at $1.2050.

Bonds

• The yield on 10-year Treasuries nudged down to 1.16%.
• Australia’s 10-year bond yield fell four basis points to 1.23%.

Commodities

• West Texas Intermediate crude rose 0.2% to $58.07 a barrel after jumping 2.2%.
• Brent crude gained 2.1% to $60.56 a barrel.
• Gold was at $1,831.20 an ounce.

©2021 Bloomberg L.P.