Asia Stocks to Fall; Bond Curves Flag Growth Fears: Markets Wrap
(Bloomberg) -- Asian stocks looked set to fall early Thursday amid concerns that the recovery from the pandemic will slow as elevated inflation forces tighter monetary policy. Sovereign-debt yield curves flattened.
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Australian shares slipped, while futures declined for Japan and were steady for Hong Kong. The S&P 500 and Dow Jones Industrial Average retreated from all-time highs, while the Nasdaq 100 touched an intraday record, powered by the likes of Google parent Alphabet Inc. and Tesla Inc. U.S. contracts edged up.
The gaps between shorter maturity and longer term yields narrowed in a number of countries. For some that’s a signal of growth concerns given that price pressures stoked by an energy crunch and supply-chain snarls are pushing central banks toward paring accommodation. The 30-year U.S. Treasury yield fell below 2%. A gauge of the dollar was steady.
Commodities including aluminum, iron ore and crude oil dropped. In China, officials plan to cap a key coal price. Risks from the nation’s property-market slowdown and crackdown on private enterprise are in focus too.
Global stocks remain close to all-time peaks, supported by robust corporate earnings so far. The risk is sentiment could weaken if investors lose confidence in the ability of policy makers to contain inflation while nurturing the economic rebound. The resilience of the tech-heavy Nasdaq 100 overnight and tumble in U.S. small-cap shares hinted at doubts about the reopening trade.
There seems to be “less confidence that the Fed will be able to thread the needle and neither end up behind the curve with its taper timeline/gradual hikes nor ahead of the curve if it reacts too quickly,” Jonathan Cohn, head of rates trading strategy at Credit Suisse, wrote in a note.
Investors are awaiting the European Central Bank policy meeting as well as a report later Thursday on U.S. economic growth, which is likely to show a cooling recovery.
Meanwhile, the White House is stepping up pressure on congressional Democrats to finalize a framework for President Joe Biden’s as much as $2 trillion tax-and-spending plan.
Elsewhere, Bitcoin retreated below $60,000, falling further back from the peak of almost $67,000 reached last week.
Here are some events to watch this week:
Earnings: Samsung Electronics, China Vanke, PetroChina
Bank of Japan monetary policy decision, briefing, Thursday
ECB rates decision, President Christine Lagarde briefing, Thursday
U.S. GDP, initial jobless claims, Thursday
G-20 joint finance and health ministers meeting ahead of the weekend leaders’ summit, Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 8:05 a.m. in Tokyo. The S&P 500 fell 0.5%
Nasdaq 100 futures increased 0.2%. The Nasdaq 100 rose 0.3%
Nikkei 225 futures dropped 0.9%
Australia’s S&P/ASX 200 Index declined 0.4%
Hang Seng Index futures were little changed
Currencies
The Japanese yen was at 113.80 per dollar
The offshore yuan was at 6.3936 per dollar
The Bloomberg Dollar Spot Index was little changed
The euro was at $1.1602
Bonds
The yield on 10-year Treasuries declined seven basis points to 1.54%
Australia’s 10-year bond yield dropped dropped three basis points to 1.79%
Commodities
West Texas Intermediate crude fell 0.6% to $82.15 a barrel
Gold was at $1,796.69 an ounce
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