U.S. Futures, Asian Stocks Steady After Tech Drop: Markets Wrap

(Bloomberg) -- U.S. equity futures and Asian stocks were steady Wednesday after a selloff in technology shares amid comments from Treasury Secretary Janet Yellen on interest rates that rattled markets. The dollar held gains.

S&P 500 contracts were little changed following a climb in commodity, financial and industrial sectors that helped the gauge pare losses. Weakness in megacaps such as Apple Inc., Tesla Inc. and Amazon.com Inc. dragged the Nasdaq 100 lower. Australian shares fluctuated, while Hong Kong futures declined. Holidays in key markets including Japan, China and South Korea will limit trade in Asian hours.

Yellen said rates will likely rise as government spending ramps up and the economy responds with faster growth, comments that economists regarded as self-evident. In a subsequent interview, the former Federal Reserve Chair said she wasn’t predicting or recommending rate hikes.

Commodities rallied to the highest in almost a decade as a rebound from the pandemic in the world’s largest economies stokes demand for metals, food and energy. Treasury futures were steady, with cash markets closed in Asia.

The debate on whether government spending could spur excessive inflation comes as stock valuations hover near the highest levels in two decades. Investors have been reluctant to push rallies further despite some blowout corporate earnings. While the Fed has assured markets that interest rates will remain at current lows throughout the recovery, strengthening data raised concerns that policy makers may move to tighten sooner than anticipated.

“Yellen’s comments did not specify a timeframe for rises and she clarified her comments by saying that she was not recommending FOMC rate hikes,” said Kim Mundy, currency strategist at the Commonwealth Bank of Australia. “We still expect the FOMC will be very patient as economic data improves.”

The latest numbers showed the U.S. trade deficit widening to a new record in March. Meanwhile, a senior White House economic aide demurred on the question of whether President Joe Biden will nominate Fed Chair Jerome Powell for a second four-year term, saying the decision on selecting the next central bank chief will come after a thorough process.

Here are some key events to watch this week:

• U.S. ADP employment change is due Wednesday
• Chicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College on Wednesday. Cleveland Fed President Loretta Mester gives a virtual speech to the Boston Economic Club
• Bank of England rate decision Thursday
• The April U.S. employment report is released on Friday

These are some of the main moves in markets:

Stocks

• S&P 500 futures rose less than 0.1% as of 8:11 a.m. in Hong Kong. The S&P 500 Index lost 0.7%
• Nasdaq 100 contracts were flat after the index fell 1.9%
• Australia’s S&P/ASX 200 slipped 0.1%
• Hang Seng Index futures declined 1.1% earlier

Currencies

• The Japanese yen traded at 109.34 per dollar
• The offshore yuan was at 6.4840 per dollar
• The Bloomberg Dollar Spot Index was steady
• The euro traded at $1.2015

Bonds

• The yield on 10-year Treasuries was steady at 1.59%

Commodities

• West Texas Intermediate crude rose 0.8% to $66.23 a barrel
• Gold was at $1,777.70 an ounce

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