Asia Set for Gains After Tech Rally; Yields Drop: Markets Wrap

(Bloomberg) -- Asian stocks looked set for gains Friday after U.S. technology shares rallied and Treasuries advanced, with investors unwinding some of this year’s dominant reflation trades. The dollar held an advance and commodities slumped.

Futures pointed higher in Japan, Australia and Hong Kong. U.S. futures edged up after the tech-heavy gauge rose to a record high as investors rotated from cyclical stocks. The benchmark S&P 500 ended little changed. Treasury yields tumbled amid speculation investors were unwinding curve steeping trades after Federal Reserve officials signaled monetary policy tightening could start earlier than expected, helping to rein in the risk that inflation might get out of hand.

The Bloomberg Dollar Spot Index rose for a fifth day, the longest winning streak since March 2020, making commodities that are priced in the currency more expensive. Copper led an index of commodities lower. Gold tumbled to below $1,800 an ounce. Oil steadied after a slide.

Meanwhile, Chinese equities will be in focus after U.S. regulators proposed a ban on products from Huawei Technologies Co. and four other Chinese electronics companies.

Some investors have interpreted comments from Fed Chair Jerome Powell following the Fed meeting as preparing markets for a hawkish tilt and an eventual tapering. A faster-than-expected pace of tightening would mark a turning point in the Fed’s communication to global markets, which had so far been ultra-dovish.

“What we are seeing here is an interpretation that economic growth is improving and inflation is accelerating; historically both of those are positive for areas like the Nasdaq, tech stocks and even small caps,” Dave Mazza, Direxion managing director and head of product. “Once we peel the onion a bit, what we are seeing in the data, all of this is generally positive for the economy.”

Copper fell in London to the lowest in two months. The rally in metals has stalled in recent weeks and copper has retreated from last month’s record as concerns about cost pressures spurred expectations stimulus that had been supporting the global recovery would be scaled back.

Read: Stock-Market Doldrums Face Shake-Up With Friday’s ‘Witching’

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Here are some key events to watch this week:

• The Bank of Japan’s monetary policy decision is on Friday

These are some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 7:51 a.m. in Tokyo. The S&P 500 was little changed
• Nasdaq 100 futures gained 0.2%. The Nasdaq 100 rose 1.3%
• Nikkei 225 futures rose 0.3%
• Australia’s S&P/ASX 200 Index futures added 0.5%
• Hang Seng Index futures climbed 0.3%

Currencies

• The Japanese yen was at 110.29 per dollar
• The offshore yuan traded at 6.4538 per dollar
• The Bloomberg Dollar Spot Index dipped
• The euro was at $1.1911

Bonds

• The yield on 10-year Treasuries declined seven basis points to 1.50%
• Australia’s 10-year bond yield fell five basis points to 1.60%

Commodities

• West Texas Intermediate crude was little changed at $71.03 a barrel
• Gold was at $1,775.91 an ounce

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