Asian stocks looked set to drop after U.S. shares fell from a record, oil slumped and Treasury yields touched the highest levels in more than a year amid concern the Federal Reserve will allow inflation to accelerate.
Crude prices added to Thursday’s decline of about 7%, in part on concerns that new virus-related curbs in Europe will sap demand. A spike in U.S. Treasury yields drove the 10-year benchmark to 1.75% for the first time since January 2020 before subsiding. Bond futures pointed to a modest rally. The dollar held its gains from the prior day.
Australian stocks opened lower, and equity futures fell in Japan and Hong Kong. Contracts on the Nasdaq 100 were little-changed after the index fell 3.1% on Thursday, as the renewed rise in U.S. rates dented demand for technology shares with high valuations. The S&P 500 Index closed down 1.5%.
Traders were also bracing for quadruple witching Friday, a major expiration of options and futures contracts that can exacerbate swings in asset prices.
“We’re seeing a pattern where an uncomfortable spike in the 10-year Treasury reminds equity investors that their tech stocks are trading well above average,” said Mike Bailey, director of research at FBB Capital Partners.
Treasury Yields Top 1.75% After Powell Spurs Bets on Inflation
Fed Chairman Jerome Powell’s willingness to let the economy run hotter with central bank support has spurred bets on faster inflation, sending market expectations of price pressures to multi-year highs. Across the Atlantic, France announced a lockdown of regions including Paris to fight the pandemic, raising fresh doubts about the speed of Europe’s recovery as the region struggles to roll out vaccines.
Japan’s central bank decision is likely to draw attention amid speculation that policy makers may adjust their bond-yield target range and asset purchases after a policy review that could have sizable implications for investors.
Elsewhere, a number of European nations will start using AstraZeneca Plc’s Covid-19 vaccine again after the European Union’s drug regulator endorsed it as safe. In Alaska, senior U.S. and Chinese officials began their first talks since Joe Biden became president.
Ray Dalio, founder of Bridgewater Associates, says Federal Reserve Chair Jay Powell may need to raise interest rates earlier then he wants to. Dalio speaks to David Westin for an upcoming episode of “Bloomberg Wall Street Week.”
(Source: Bloomberg)
The Bank of Japan has a monetary policy decision scheduled Friday, with a briefing from Governor Haruhiko Kuroda.
These are some of the moves in markets as of 8:10 a.m. in Tokyo:
Stocks
- S&P 500 futures gained 0.1%, after the benchmark closed down 1.5%.
- Nasdaq 100 Index futures were little changed. The index fell 3.1%.
- Nikkei 225 futures were down 1%.
- Australia’s S&P/ASX 200 Index fell 0.4%.
- Hong Kong’s Hang Seng Index futures dropped 0.7% earlier.
Currencies
- The yen traded at 108.93 per dollar.
- The offshore yuan was at 6.5083 per dollar.
- The Bloomberg Dollar Spot Index was steady.
- The euro was at $1.1917.
- The British pound was at $1.3924.
Bonds
- The yield on 10-year Treasuries jumped seven basis points to 1.71% Thursday.
- Australia’s 10-year yield rose seven basis points to 1.85%.
Commodities
- West Texas Intermediate crude slipped 1%, extending steep declines to below $60 a barrel.
- Gold was at $1,734.17 per ounce.
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Stock Market Today: Dow, S&P Live Updates for Mar. 19, 2021 - Bloomberg
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