Asia Stocks Set for Muted Open; Treasuries Gain: Markets Wrap

(Bloomberg) -- Asian stocks looked set for a muted start Wednesday after their U.S. peers retreated on concerns about excessive investor optimism. Treasuries climbed and the dollar weakened.

Futures were little changed in Japan, while Australian stocks saw modest gains. S&P 500 futures edged higher after technology shares led losses in the benchmark on Tuesday. Apple Inc. and Tesla Inc. dragged down the Nasdaq 100 -- with the electric-car maker tumbling more than 4%.

Benchmark Treasury yields dipped amid comments from Federal Reserve Governor Lael Brainard that bond-market volatility may further delay a pullback in the central bank’s massive asset purchases. U.S. inflation-adjusted yields retreated.

Investors are focusing closely on valuations amid concerns about excessive optimism in markets. China’s top banking regulator warned Tuesday about the need to reduce leverage given the rising risk of bubbles in global markets, while bullishness among Wall Street strategists is approaching levels that have presaged potential trouble for stocks, according to a Bank of America gauge.

“We believe we’re still very much in a bull market, but certain pullbacks like the one we’ve seen since the beginning of this year are very natural and sometimes needed,” Katerina Simonetti, Morgan Stanley Private Wealth Management senior vice president, told Bloomberg TV. “If interest rates start moving higher and quicker than expected, then there’s a chance there might be more significant pullback in the market.”

Elsewhere, oil extended losses below $60 a barrel with the OPEC+ alliance said to be set to agree to a production increase later this week. Bitcoin fluctuated below $50,000.

There are some key events to watch this week:

• U.S. Federal Reserve Beige Book is due Wednesday.
• OPEC+ meeting on output Thursday.
• U.S. factory orders, initial jobless claims and durable goods orders are due Thursday.
• The February U.S. employment report on Friday will provide an update on the speed and direction of the nation’s labor market recovery.

These are some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 8:04 a.m. in Tokyo. The S&P 500 fell 0.8%.
• Nikkei 225 futures were little changed.
• Australia’s S&P/ASX 200 Index rose 0.2%.
• Hong Kong’s Hang Seng Index futures gained 0.5% earlier.

Currencies

• The yen was little changed at 106.72 per dollar.
• The offshore yuan traded at 6.4745 per dollar.
• The Bloomberg Dollar Spot Index fell 0.3%.
• The euro was at $1.2085.

Bonds

• The yield on 10-year Treasuries dipped 3 basis points to 1.39%.
• Australia’s 10-year bond yield fell 3 basis points to 1.69%.

Commodities

• West Texas Intermediate crude fell 0.3% to $59.32 a barrel.
• Gold was steady at $1,739.03 an ounce.

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