Stocks in Asia Gain With Bonds Steady; Oil Climbs: Markets Wrap

Stocks in Asia Gain With Bonds Steady; Oil Climbs: Markets Wrap

(Bloomberg) -- U.S. equity futures and Asian stocks advanced Tuesday as investors focused on expectations for faster growth, and bond yields and commodities stabilized after their run-up on inflation concerns. The dollar dipped.

Stocks outperformed in Hong Kong and Australia. Japan is shut for a holiday. S&P 500 contracts climbed after fluctuating earlier. The index fell for a fifth day, its longest losing streak in a year. The Nasdaq 100 tumbled more than 2% as investors questioned the appeal of more expensive equities.

The Bloomberg Commodity Spot Index, which tracks price movements for 23 raw materials, earlier rose to its highest since March 2013. Brent oil consolidated above $65 a barrel as Goldman Sachs Group Inc. predicted prices could top $70 in coming months. WTI crude rose toward $63 a barrel.

Bonds steadied after a key part of the Treasury curve -- the gap between 5- and 30-year yields -- touched the highest level in more than six years. Cash Treasuries won’t trade in Asia because of the Japan holiday.

The stock market’s searing rally from the depths of the pandemic almost a year ago is under scrutiny as long-term borrowing costs rise. One concern is that broad benchmarks have already priced in much of the prospective global recovery spurred by vaccines and U.S. stimulus. Another is that central banks may eventually start reconsidering emergency programs that have supported global markets.

“The timing of a pullback is even more uncertain than we previously understood,” said Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets. The recent rise in 10-year yields is “an additional trigger for the rotation out of secular growth/safety trades. We see plenty of room for the reflation trade to run from a valuation perspective.”

Policy makers are becoming concerned about the rapid rise in bond yields. European Central Bank President Christine Lagarde said overnight her institution is “closely monitoring” the market for government bonds.

Elsewhere, Bitcoin retreated nearer to $50,000. It plunged as much as 17% Monday. Brazilian markets tumbled following President Jair Bolsonaro’s decision to replace the head of Petroleo Brasileiro SA.

Some key events to watch this week:

Fed Chair Jerome Powell delivers the central bank’s semi-annual monetary policy report to the Senate Banking Committee on Tuesday.EIA crude oil inventory report is out Wednesday.Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.

These are some of the main moves in markets:

Stocks

S&P 500 futures rose 0.5% as of 6:14 a.m. in London. The S&P 500 Index declined 0.8%.Australia’s S&P/ASX 200 Index rose 0.9%.South Korea’s Kospi index fell 0.1%.Hong Kong’s Hang Seng Index added 1.3%.Shanghai Composite Index was little changed.Euro Stoxx 50 futures rose 0.1%.

Currencies

The yen traded little changed at 105.10 per dollar.The offshore yuan rose 0.1% to 6.4631 per dollar.The Bloomberg Dollar Spot Index slipped 0.1%.The euro was as $1.2167.

Bonds

Ten-year Treasury futures were little changed. The yield on 10-year Treasuries rose three basis points to 1.37% Monday. Cash Treasuries won’t trade until the London open because of the Japan holiday.Australia’s 10-year bond yield dipped four basis points to 1.56%.

Commodities

West Texas Intermediate crude rose 1.5% to $62.63 a barrel.Gold added 0.2% to $1,813.44 an ounce.

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