U.S. equity futures retreated and Asian stocks were mixed Tuesday following weakness among the technology giants on Wall Street. The dollar rallied.
Shares rose in Hong Kong, Australia and South Korea. Taiwan’s benchmark pared intraday losses as steep as 3.3%, with investors trimming risk after the index beat all major global peers in April. Japan and China were among markets closed for holidays. U.S. contracts fell after the S&P 500 ended near session lows and shares such as Tesla Inc. and Amazon.com Inc. weighed on the Nasdaq 100. European futures fluctuated.
Ten-year Treasury yields dropped back to around 1.6% in U.S. trade amid comments from Federal Reserve Chair Jerome Powell that the economic recovery is patchy.
A gauge of commodity prices is at the highest level since 2012. Silver and gold gave up some of their earlier advance, while oil held gains of more than 1%. Digital token Ether extended its surge to set another record.
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Recent history shows staying with U.S. stocks may pay off in the next six months
Source: Bloomberg
The latest economic reports were a reminder that the rebound from the pandemic still faces risks, such as faster inflation. U.S. manufacturers cooled in April, while a gauge of prices paid for materials jumped to the highest since 2008. Powell reiterated progress in the recovery has been uneven across racial and income divides. New York Fed President John Williams said current conditions are “not nearly enough” for a shift in the monetary policy stance.
“We do believe that inflationary pressures will continue this year and that’s driven by the kind of policy we have seen globally,” Rupal Agarwal, a quantitative strategist at Sanford C Bernstein, said on Bloomberg TV. “In the shorter term you can expect some pullback in the markets but the broader sentiment remains bullish” as the reopening and reflation trade remains in force, she said.
Markets seem to be looking through the persistent threat of the pandemic, focusing instead on the relative success of the vaccine rollouts in much of the developed world. Meanwhile, fierce new Covid-19 waves are enveloping India and parts of Southeast Asia, placing severe strain on their health-care systems and prompting appeals for help.
In Australia, the central bank kept its cash rate unchanged, as expected, and said it doesn’t see conditions for rates to rise until 2024. It also raised its growth forecast and said it would review its bond purchases in July.
Here are some key events to watch this week:
- U.S. trade balance, factory orders, durable goods are due Tuesday
- Chicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College on Wednesday. Cleveland Fed President Loretta Mester gives a virtual speech to the Boston Economic Club
- Bank of England rate decision Thursday
- The April U.S. employment report is released on Friday
These are some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.2% as of 7 a.m. in London. The S&P 500 rose 0.3%. Nasdaq 100 contracts slipped 0.2%
- Australia’s S&P/ASX 200 Index rose 0.5%
- South Korea’s Kospi rose 0.4%
- Hong Kong’s Hang Seng Index rose 0.5%
- Euro Stoxx 50 futures rose 0.1%
Currencies
- The yen fell 0.2% to 109.30 per dollar
- The offshore yuan was at 6.4767 per dollar
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro traded at $1.2039, down 0.2%
Bonds
- Ten-year Treasury futures were little changed. The yield on 10-year Treasuries declined almost three basis points to 1.60%. Cash Treasuries were closed in Asia Tuesday
- Australia’s 10-year bond yield was at 1.76%
Commodities
- West Texas Intermediate was at $64.43 a barrel
- Gold was down 0.3% to $1,786.86 an ounce after climbing 1.3%
— With assistance by Rita Nazareth, and Claire Ballentine
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