Asian Stocks Set to Dip as Traders Mull Fed Views: Markets Wrap

Asian Stocks Set to Dip as Traders Mull Fed Views: Markets Wrap
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Andreea Papuc
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(Bloomberg) -- Asian stocks are set to slip early Thursday after U.S. stocks dipped amid mixed economic data and comments from a Federal Reserve official that the central bank is on course to taper stimulus support.

Futures fell in Japan and Australia and were flat in Hong Kong. U.S. contracts fluctuated after the S&P 500 fell from a record, led lower by energy shares, while the technology sector proved more resilient. Vice Chairman Richard Clarida said the Fed is on track for a liftoff in interest rates in 2023 and an announcement later this year on paring bond purchases.

Clarida’s comments helped to cement money-market bets for an initial rate hike in early 2023. The latest economic data showed a much softer-than-expected ADP employment report but a record expansion for U.S. service industries. Treasury yields ended little changed and the dollar held a climb.

Oil tumbled below $70 a barrel after an increase in U.S. crude inventories added to concerns about demand recovery amid the coronavirus resurgence.

Clarida painted an upbeat picture of the outlook while acknowledging that the rapid spread of the delta virus strain poses a downside risk. Global stocks remain close to all-time highs as investors assess the Fed outlook, robust earnings and the challenges to economic reopening from Covid-19. China’s regulatory crackdown on private industries also remains in focus.

“The market’s signaling we’re not out of the woods yet,” Cate Faddis, Grace Capital president and chief investment officer, said in an interview. “On the other hand, we’ve had a very strong year. It’s rational for the market to take a deep breath.”

Among other Fed comments, St. Louis President James Bullard reiterated the view that the jump in U.S. inflation will be temporary but added it will be “more persistent” than many expect. Dallas President Robert Kaplan called for a gradual reduction in bond purchases soon as long as there’s progress in jobs numbers.

In cryptocurrencies, the second-largest coin Ether was around a two-month high following a software upgrade that will trim the pace at which fresh tokens are minted.

Meanwhile, global Covid-19 cases topped 200 million in the 18-month pandemic. Israel, one of the world’s most vaccinated nations, called on employers to switch to work-at-home and warned that it may have to impose new lockdowns.

Here are some key events to watch this week:

Bank of England is expected to keep its benchmark interest rate and its bond-buying target unchanged ThursdayReserve Bank of India monetary policy decision, briefing FridayThe U.S. jobs report is expected to show another robust month of hiring Friday

For more market analysis read our MLIV blog.

These are the main moves in markets:

Stocks

S&P 500 futures were steady as of 8:45 a.m. in Tokyo. The S&P 500 fell 0.5%Nasdaq 100 contracts were little changed. The Nasdaq 100 rose 0.2%Nikkei 225 futures fell 0.3%Australia’s S&P/ASX 200 Index futures fell 0.2%Hang Seng Index futures were little changed

Currencies

The Japanese yen was at 109.49 per dollarThe offshore yuan traded at 6.4633 per dollarThe Bloomberg Dollar Spot Index was flatThe euro was at $1.1837

Bonds

The yield on 10-year Treasuries was at 1.18%

Commodities

West Texas Intermediate crude was at $68.10 a barrel after sliding 3.4%Gold was at $1,812.50 an ounce

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