Global Stock Rally Stalls; Dollar Holds Decline: Markets Wrap

(Bloomberg) -- The global equity rally stalled Wednesday as investors mulled the potential for a stimulus-fueled rebound to trigger destabilizing inflation. The dollar steadied after an overnight decline.

Stocks dipped in Japan and were little changed in Australia and South Korea. S&P 500 futures fluctuated after the benchmark halted a six-day winning streak and edged back from an all-time high. Treasuries were steady with the yield on benchmark notes trading around 1.16%. Earlier, the Nasdaq 100 Index eked out a gain, while small caps notched the longest rally since December 2019.

Elsewhere, oil was little changed after seven sessions of gains on signs the global market is tightening and demand is improving. Bitcoin pulled back from a record it reached after Tesla Inc. bought $1.5 billion of the cryptocurrency.

Elevated valuations are giving investors pause as they cheer advancing vaccination efforts, rising stimulus prospects and a slowdown in coronavirus infections across the globe. A ramp up in inflation expectations has also highlighted a debate about whether the so-called reflation trade in bonds could create jitters for global equities trading near record highs.

“A pullback here could give tactical opportunities to those who were looking to get involved,” Mona Mahajan, investment strategist at Allianz Global Investors, said on Bloomberg TV. “It seems like right now the story is just getting started, and the momentum is building behind it, and that story includes the reopening, vaccines, the downward trend now in some of the virus cases we’ve been seeing, supported by the stimulus talks and the Fed still on the side lines.”

Here are some key events coming up:

• Earnings season continues with companies including 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 added 0.1% as of 9:04 a.m. in Tokyo. The index fell 0.1% on Tuesday.
• Japan’s Topix index fell 0.2%.
• South Korea’s Kospi rose 0.3%.
• Australia’s S&P/ASX 200 Index gained 0.2%.

Currencies

• The Bloomberg Dollar Spot Index was flat after losing 0.5% on Tuesday.
• The euro bought $1.2115.
• The onshore yuan was at 6.4199 per dollar.
• The yen traded at 104.56 per dollar.

Bonds

• The yield on 10-year Treasuries remained at 1.16%.

Commodities

• West Texas Intermediate crude was steady at $58.34 a barrel.
• Gold was at $1,837.02 an ounce.

©2021 Bloomberg L.P.