Stocks Set to Fall, U.S. Futures Weaken; Oil Slips: Markets Wrap

Andreea Papuc
·2 min read

(Bloomberg) -- Asian stocks are set to dip Monday and U.S. futures retreated on concerns about elevated inflation and the impact of the delta Covid-19 variant on economic reopening. Oil slipped after an OPEC+ supply deal.

Futures slid in Japan, Australia and Hong Kong. U.S. contracts declined after the S&P 500 fell for the first week in four. Traders are also monitoring the surprising rally in Treasuries, which pushed the 10-year yield lower for a third week.

Oil slipped after OPEC+ agreed to boost production into 2022, resolving an internal dispute that had shaken the alliance. The yen advanced and the dollar was steady amid cautious sentiment.

A global rally in equities has paused amid a debate about whether elevated inflation will temper the economic rebound from the pandemic, in part by leading central banks to start paring monetary policy support. Investors are also trying to make sense of the decline in Treasury yields, which for some is a signal of cracks in the global recovery but for others a bond rally that’s likely gone too far.

“Shares are at high risk of seeing more weakness in the short term as coronavirus cases rise, the inflation scare continues and central banks become less dovish,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note.

Elsewhere, the pound was steady with the U.K. government due to lift remaining virus curbs in England. At the same time, Prime Minister Boris Johnson agreed to self isolate after being exposed to Covid-19.

For more market commentary, follow the MLIV blog.

Here are some key events to watch this week:

Reserve Bank of Australia meeting minutes TuesdayEuropean Central Bank rate decision ThursdayBank Indonesia rate decision ThursdayU.S. existing home sales ThursdayThe Tokyo Summer Olympics begin Friday

Stocks

S&P 500 futures slipped 0.3% as of 8:36 a.m. in Tokyo. The S&P 500 fell 0.8% FridayNasdaq 100 futures fell 0.3%. The Nasdaq 100 lost 0.8%Nikkei 225 futures fell 0.9%Australia’s S&P/ASX 200 Index futures fell 0.5%Hang Seng futures fell 0.9% earlier

Currencies

The Japanese yen edged up 0.1% to 109.93 per dollarThe offshore yuan was at 6.4775 per dollarThe Bloomberg Dollar Spot Index was steadyThe euro was little changed at $1.1810

Bonds

The yield on 10-year Treasuries was little changed at 1.29% FridayAustralia’s 10-year bond yield fell seven basis points to 1.22%

Commodities

West Texas Intermediate crude dipped 0.7% to $71.37 a barrelGold was at $1,812.77 an ounce

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