Asia Stocks Look Mixed as U.S. Tech Drops; Oil Up: Markets Wrap

(Bloomberg) -- Asia stocks are likely to be subdued as rotation out of companies that benefited from the pandemic dragged down U.S. equities. Oil jumped as crews struggle to remove a giant container ship blocking the Suez Canal.

A slide in technology shares dragged the Nasdaq 100 down 1.7%. Energy producers, banks and transportation companies fared better as traders bought up cyclical stocks. The dollar strengthened. Futures edged up in Japan and were lower in Australia and Hong Kong.

Decent demand at an auction of five-year Treasury notes helped keep U.S. yields steady, a relief after last month’s disastrous seven-year auction sparked a global selloff in bonds.

Investors are mulling which sectors of the stock market are best-placed to benefit from strengthening growth, while monitoring the risks of higher inflation. Both the Treasury Secretary and Federal Reserve Chairman balanced their positive assessment of the recovery with reminders that it still has a long way to go in a second day of Congressional testimony.

“As long as we continue to exceed expectations on the economic front, which I think we will, the cyclical trade is still going to have legs,” Brian Nick, chief investment strategist at Nuveen, told Bloomberg Television.

The market focus is also on the about-face in oil prices. West Texas Intermediate crude added more than 5% after a container ship ran aground in the Suez Canal and blocked traffic in both directions on one of the world’s busiest maritime trade routes. Some traffic should resume Thursday after efforts to move the giant vessel.

Elsewhere, the threat of Chinese stocks being kicked off U.S. exchanges is gaining traction, with the Securities and Exchange Commission starting to implement a tough law passed at the end of the Trump administration.

Bitcoin has reversed the gains it made following Tesla Inc. Chief Executive Officer Elon Musk’s tweet that the firm’s cars can be purchased with the cryptocurrency. It was around $54,000 in early Asia trading.

These are some key events to watch this week:

• The U.S. Treasury auctions seven-year debt.
• U.S. personal income and spending data on Friday.

These are some of the main moves in financial markets:

Stocks

• The S&P 500 Index fell 0.6%.
• Nikkei 225 futures rose 0.4%.
• Australia’s S&P/ASX 200 Index fell 0.2%.
• Hong Kong’s Hang Seng Index fell 0.4%.

Currencies

• The yen weakened 0.1% to 108.73 per dollar.
• The offshore yuan was at 6.5288 per dollar.
• The Bloomberg Dollar Spot Index rose 0.3%.
• The euro fell 0.3% to $1.1810.
• The British pound sank 0.5% to $1.3687.

Bonds

• The yield on 10-year Treasuries fell one basis point to 1.61%.

Commodities

• West Texas Intermediate crude gained 5.3% to $60.83 a barrel.
• Gold strengthened 0.4% to $1,733.92 an ounce.

©2021 Bloomberg L.P.