U.S. Equity Futures Dip, Asia Set for Weak Open: Markets Wrap

(Bloomberg) -- U.S. equity futures slipped Wednesday and Asian stocks were set for a weak open after a drop on Wall Street amid concern that the recovery from the pandemic faces a test from faster inflation as commodities rally.

Equity contracts fell in Japan and Australia, but rose earlier in Hong Kong. S&P 500 and Nasdaq 100 futures opened in the red. The S&P 500 dropped for a second day following a record high Friday. Dip buyers helped the tech-heavy Nasdaq 100 erase a loss of almost 2% to finish little changed.

Treasury yields advanced and the dollar traded near the lowest levels of this year. Investors are awaiting an inflation report and government debt sales in the U.S. -- events that could trigger another bond selloff. Consumer price inflation is set to accelerate, with the year-on-year comparison amplified by the pandemic shock in 2020.

Debate continues over whether price pressures will be persistent enough to force the Federal Reserve to tighten policy sooner than current guidance suggests. A chorus of Fed officials said the U.S. economy is on the road to recovery but still faces risks, and reiterated that it’s premature to discuss pulling back monetary support.

“In general there’s this thought that inflation may rear its ugly head,” said JJ Kinahan, chief market strategist at TD Ameritrade. “We see a little bit higher rates -- not significantly -- but a bit higher rates. And I think this struggle between value and growth also continues.”

The weaker dollar boosted oil, helping to offset the effects of rising inventories in the U.S. Gulf Coast in response to the Colonial Pipeline shutdown. Copper traded near a record, and the Bloomberg Commodity Spot Index hovered around the highest levels in almost a decade.

Here are some key events to watch this week:

• U.S. CPI report Wednesday is forecast to show prices continued to increase in April
• Bank of England Governor Andrew Bailey speaks Wednesday

These are some of the main moves in markets:

Stocks

• S&P 500 futures dipped 0.1% as of 7:30 a.m. in Tokyo. The S&P 500 index fell 0.9%.
• Nasdaq 100 contracts fell 0.1%. The index was little changed.
• Nikkei 225 futures fell 0.5%
• Australia’s S&P/ASX 200 Index futures fell 0.6%
• Hong Kong’s Hang Seng Index futures rose 0.4% earlier

Currencies

• The yen was at 108.63 per dollar
• The offshore yuan was at 6.4285 per dollar
• The Bloomberg Dollar Spot Index was little changed
• The euro traded at $1.2147

Bonds

• The yield on 10-year Treasuries advanced two basis points to 1.62%

Commodities

• West Texas Intermediate crude rose 0.3% to $65.45 a barrel
• Gold was at $1,836.60 an ounce

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