Asian Stocks Set to Rally Following U.S. Rebound: Markets Wrap

(Bloomberg) -- Stocks in Asia look set to rally after U.S. benchmarks halted a three-day slide, with investors migrating to value from growth companies as signs of a strengthening labor market tempered inflation worries.

Futures pointed higher in Japan, Hong Kong and Australia. Investors will be watching China’s open after MSCI Inc.’s index covering the country’s stocks fell into bear-market territory.

U.S. contracts fluctuated after gains in the major benchmarks overnight. Industrial and financial shares outperformed, while energy producers joined a slump in oil. Tesla Inc. fell after Chief Executive Officer Elon Musk said the electric-car maker is suspending purchases using Bitcoin over environmental concerns.

Bitcoin pared some of the losses sparked by Musk’s comments but remains under pressure, trading below $50,000. Coinbase Global Inc. fluctuated in late trading as the biggest U.S. cryptocurrency exchange reported revenue below Wall Street estimates.

Markets appear to have recovered from a bout of volatility following an unexpectedly sharp increase in the U.S. consumer price index. The latest data reinforced inflation pressures, with producer prices outpacing forecasts, but a drop in jobless claims helped sentiment. Fed Governor Christopher Waller reiterated the central bank’s view that the economic reopening is driving a temporary surge in price pressures, though they may last through 2022.

“We see 10-year yields move up, we see inflation expectations move up, but as long as the underlying economic backdrop is still doing just fine it should power that value trade generally,” Lori Calvasina, RBC Capital Markets head of equity strategy, said on Bloomberg TV. “We’re going to have some interesting days but the runway is there from an economic perspective for this rotation to keep going.”

Treasuries rallied from the prior session’s weakness, with the 10-year yield easing to 1.66% despite a lackluster auction of 30-year bonds. The Federal Reserve tweaked its purchasing plan to focus more on longer-dated Treasuries, while leaving the $80 billion monthly total unchanged.

Meanwhile, concerns about a possible pullback in Fed support have stalled the rally in commodities. Oil slumped the most in over a month as growing inflation concerns raise the specter of a less accommodative central bank.

These are some of the main moves in markets:

Stocks

• S&P 500 contracts climbed 0.1% as of 8:18 a.m. in Tokyo. The S&P 500 rose 1.2%
• Nasdaq 100 futures were steady. The index rose 0.8%
• Japan’s Nikkei 225 futures were up 0.7%
• Australia’s S&P/ASX 200 futures climbed 0.7%
• Hong Kong’s Hang Seng futures rose 0.7% earlier

Currencies

• The Bloomberg Dollar Spot Index was steady
• The euro was at $1.2079
• The British pound traded at $1.4049
• The Japanese yen was at 109.48 per dollar

Bonds

• The yield on 10-year Treasuries declined three basis points to 1.66%
• Australia’s 10-year yield slipped two basis points to 1.80%

Commodities

• West Texas Intermediate crude was steady around $63.83 a barrel, after falling 3.4% in U.S. hours
• Gold futures traded at $1,825.77 an ounce

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