Asian Stocks Dip as Dollar, Treasuries Edge Higher: Markets Wrap

Asian Stocks Dip as Dollar, Treasuries Edge Higher: Markets Wrap
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Emily Barrett
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(Bloomberg) -- Most Asian stocks dipped Tuesday as Treasuries and the dollar edged higher, with traders monitoring mixed virus trends and awaiting a series of U.S. auctions that will test demand for bonds.

Shares fell in China and Hong Kong and posted modest gains in Japan. U.S. and European equity futures retreated after an overnight rally on Wall Street that saw the Nasdaq 100 outperform the S&P 500, aided by a drop in long-term borrowing costs.

The 10-year U.S. Treasury yield fell back further from the highest in about 14 months amid hopes of improved demand in the lead-up to a heavy round of sales. This week’s offerings include a seven-year note, a maturity that fared poorly in last month’s auction, sending benchmark yields sharply higher.

Oil prices slid and the dollar rose. New Zealand’s dollar tumbled against major currencies after the government took steps to rein in surging property prices, a step that damped speculation about central bank rate hikes.

The stabilization in bond yields provided some relief for investors fretting that heavy U.S. spending on the recovery could reignite inflation and force tighter central-bank policy. The Biden administration is considering a multitrillion-dollar economic plan to follow the stimulus package signed earlier this month.

Encouraging economic data shouldn’t distract from the progress still to be made, Treasury Secretary Janet Yellen emphasized in prepared remarks for her Congressional testimony. The Federal Reserve will continue to support the U.S. economy for as long as it takes, Chairman Jerome Powell noted in a speech for his appearance alongside Yellen on Tuesday.

“The rotation we see day-to-day at the moment is driven by that volatility in Treasury yields -- when yields go up we see tech sell off and a rotation into value,” said Isaac Poole, global chief investment officer for Oreana Portfolio Advisory Services. “That is fairly normal in early cycle, in the uncertainty around monetary policy.”

In Germany, Chancellor Angela Merkel and other officials agreed to put the nation into a hard lockdown over Easter, seeking to reverse the latest wave of Covid-19 infections. The move came amid signs that progress against the pandemic is stalling as global deaths and cases creep higher.

Elsewhere, traders will be monitoring Microsoft Corp. later, after people familiar with the matter said it’s in talks to acquire Discord Inc., a video-game chat community, for more than $10 billion.

These are some key events to watch this week:

Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen are expected to make their first joint appearance before the U.S. House Financial Services committee to testify on Fed and Treasury pandemic policies Tuesday.The U.S. Treasury holds auctions of two-, five- and seven-year debt.EIA crude oil inventory report on Wednesday.On Friday, February U.S. personal income and spending data arrives.

These are some of the main moves in financial markets:

Stocks

S&P 500 futures dipped 0.1% as of 12:04 p.m. in Tokyo. The index rose 0.7% Monday.Nasdaq 100 futures shed 0.3% after a 1.7% gain by the index.Japan’s Topix Index rose 0.2%.Australia’s S&P/ASX 200 Index climbed 0.2%.South Korea’s Kospi dipped 0.5%.China’s Shanghai Composite lost 0.9%.Hong Kong’s Hang Seng index fell 1.3%.

Currencies

The yen added 0.1% to 108.76 per dollar.The Bloomberg Dollar Spot Index climbed 0.1%.The euro fell 0.1% to $1.1926.The New Zealand dollar fell 0.9% to 70.97 U.S. cents.

Bonds

The yield on 10-year Treasuries dipped two basis points to 1.67%.

Commodities

Gold slipped 0.3% to $1,734 an ounce.West Texas Intermediate crude fell 1.1% to $60.86 a barrel.

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©2021 Bloomberg L.P.

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