Asia Stocks Mixed on Virus Spike; Gold Holds Gain: Markets Wrap

Asian stocks were mixed Tuesday amid concern that a surge in global coronavirus cases could crimp the economic recovery, with traders also bracing for key runoff elections in the U.S. The dollar edged down and gold held gains.

Shares dipped in Australia, while Hong Kong stocks pared a decline as the New York Stock Exchange said it no longer plans to delist China’s three biggest telecommunication companies. S&P 500 contracts climbed after the benchmark suffered its worst decline to start a year since 2016. The Cboe Volatility Index, or VIX, surged the most since October. Treasuries were steady. The pound held losses after England entered its third lockdown.

Elsewhere, oil remained lower as OPEC+ talks were unexpectedly suspended on Monday after a majority of members, including Saudi Arabia, opposed Russia’s proposal for a February supply hike. Bitcoin steadied following a plunge of as much as 17% on Monday.

Tuesday’s runoff elections in Georgia, which are set to determine whether Democrats take effective control of Congress to push President-elect Joe Biden’s agenda, are impacting market sentiment. Traders are weighing scenarios such as the possibility of greater U.S. fiscal stimulus, higher taxes and more regulation under such a “blue wave.”

Meanwhile, global coronavirus infections topped 85 million. Daily cases in the U.S. jumped to a record of nearly 300,000 following the New Year holiday, and an easier-to-spread variant could intensify the surge. These trends are tempering some of the enthusiasm sparked by the rollout of vaccines.

“The first quarter will no doubt be tough; the spread has been horrific throughout the festive period and restrictions are being tightened and extended,” said Craig Erlam, senior market analyst at Oanda. “The toll on the economy will be significant but, thanks to the vaccine, consigned mostly to the first quarter.”

Markets are also watching the 10-yearbreakeven rate for Treasuries, which shows traders see U.S. inflation averaging at least 2% per year over the coming decade — the first time expectations have climbed that high since 2018.

What to watch this week:

  • On Tuesday, the state of Georgia holds a run-off election for two U.S. Senate seats that will decide control of the chamber.
  • U.S. Congress meets to count electoral votes and declare the winner of the 2020 Presidential election Wednesday.
  • FOMC minutes out Wednesday.
  • U.S. unemployment report for December is due Friday.

These are some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.3% as of 11:50 a.m. in Tokyo. The S&P 500 decreased 1.5%.
  • Japan’s Topix index fell 0.1%.
  • Australia’s S&P/ASX 200 Index dropped 0.2%.
  • South Korea’s Kospi index was flat.
  • Shanghai Composite was little changed.
  • Hong Kong’s Hang Seng Index fell 0.1%.

Currencies

  • The yen was at 103.13 per dollar.
  • The offshore yuan was at 6.4237 per dollar, up 0.4%
  • The Bloomberg Dollar Spot Index declined 0.2%.
  • The euro added 0.2% to $1.2267.
  • The pound traded at $1.3587.

Bonds

  • The yield on 10-year Treasuries climbed about one basis point to 0.92%.
  • Australia’s 10-year bond yield fell about four basis points to 0.97%.

Commodities

  • West Texas Intermediate crude rose 0.2% to $47.71 a barrel.
  • Gold fell 0.2% to $1,938.28 an ounce.

— With assistance by Rita Nazareth, and Vildana Hajric

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