Asia Eyes Steady Open on Virus Caution; Dollar Up: Markets Wrap

(Bloomberg) -- Asian stocks are set for a muted open Tuesday as traders weigh a record-breaking run in the S&P 500 against concerns the delta virus variant will choke global growth. Treasuries and the dollar climbed.

Futures edged up in Japan and were little changed in Australia and Hong Kong. U.S. equity contracts fluctuated after the S&P 500 closed at another all-time high, doubling from its pandemic low in March 2020. Health-care and utility companies advanced, while Apple Inc. hit a record. Tesla Inc. sank on an investigation into the electric-vehicle firm’s Autopilot system.

Mobility curbs to fight the fast-spreading delta variant, signs of a slowing recovery from the pandemic in China and Beijing’s regulatory crackdown on private enterprise continue to color the market mood in Asia.

Treasury yields declined on worsening virus trends in some U.S. states and as the chaotic situation in Afghanistan spurred pockets of investor caution. Traders are awaiting an address by Federal Reserve Chair Jerome Powell on Tuesday and the Jackson Hole symposium in late August for clues on when and how the U.S. central bank might taper stimulus.

While the S&P 500 is on track for one of the calmest months ever, a measure of implied volatility in VIX options has advanced for five out of seven weeks -- even as the Cboe Volatility Index kept falling -- suggesting disquiet among investors for what lies ahead. Risks include slower growth due to the delta strain, the impact of elevated inflation and the prospect of reduced central bank support.

Boston Fed President Eric Rosengren said he would be supportive of announcing a start to the Fed taper in September if the U.S. gets another “strong” labor-market report.

“The announcement of tapering is unlikely to create a large shock in the market,” Sebastien Galy, senior macro strategist at Nordea Investment Funds, wrote in a note. “The market simply had a long time to prepare for tapering. The real shock will come when the debate on a cycle of Fed rate hikes starts.”

Elsewhere, oil held a drop and gold maintained a recent advance. Bitcoin traded around $46,000.

Here are some events to watch this week:

• U.S. Fed Chair Powell hosts a town hall discussion with educators Tuesday
• China’s top legislative body, the National People’s Congress Standing Committee, begins a four-day meeting in Beijing Tuesday
• U.S. retail sales are due Tuesday
• Reserve Bank of Australia minutes are scheduled to be released Tuesday
• Reserve Bank of New Zealand policy decision and briefing by Governor Adrian Orr Wednesday
• FOMC minutes released Wednesday
• Bank Indonesia rate decision and Governor Perry Warjiyo briefing Thursday

For more market analysis read our MLIV blog.

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 7:05 a.m. in Tokyo. The S&P 500 rose 0.3%
• Nasdaq 100 futures were steady. The Nasdaq 100 was little changed
• Nikkei 225 futures rose 0.7%
• Australia’s S&P/ASX 200 Index futures rose 0.1%
• Hang Seng Index futures rose 0.1% earlier

Currencies

• The Japanese yen was at 109.25 per dollar
• The offshore yuan was at 6.4765 per dollar
• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was at $1.1778

Bonds

• The yield on 10-year Treasuries declined one basis points to 1.27%

Commodities

• West Texas Intermediate crude was at $67.46 a barrel
• Gold was at $1,787.20 an ounce

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