Asian Stocks Face Muted Start; Treasuries Slip: Markets Wrap

Asian stocks looked set for a muted start Thursday after U.S. equities eked out another record high amid renewed optimism over U.S. stimulus talks and vaccine approval. Treasury yields ticked higher and the dollar touched a more than two-year low.

Futures were little changed in Japan and slightly higher in Hong Kong and Australia. S&P 500 contracts fluctuated after the underlying gauge closed at another all-time high, led by gains in energy stocks. Tech shares underperformed on concerns about valuations. House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer called for immediate talks and said a bipartisan $908 billion aid proposal should be the foundation for negotiations. The U.K. approved the Covid vaccine from Pfizer Inc. and BioNTech SE.

Elsewhere, Australia’s 10-year yield climbed through 1%. Oil resumed this week’s decline. The pound held losses seen Wednesday, when the European Union’s chief Brexit negotiator Michel Barnier reportedly told envoys theoutcome of any deal is still too close to call.

After vaccine breakthroughs fueled record monthly gains for global stocks, investors are turning some of their attention to bonds. One of the year’s biggest spikes inTreasury yields on Tuesday has spurred speculation about the potential impact of rising rates on stocks and corporate debt.

“The market has almost immediately priced in a better-than-expected 2021, particularly in the second half and that’s what we are seeing here, and on the yield curve as well,” Alicia Levine, chief strategist at BNY Mellon Investment Management, said on Bloomberg TV. “The message here really is that better days are ahead and that dips and consolidations are eminently buyable.”

Meanwhile, Federal Reserve Chair Jerome Powell indicated Wednesday that there was no rift between the central bank and Treasury Secretary Steven Mnuchin over the sunsetting of emergency lending programs. The U.S. House cleared legislation that would impose restrictions on Chinese companies listed on U.S. exchanges.

These are some key events coming up:

  • The U.S. employment report on Friday is expected to show more Americans headed back to work in November, though at a slower pace than October.
  • German factory orders for October are due Friday.

Here are some of the main moves in markets:

Stocks

  • S&P 500 futures gained 0.1% as of 8:05 a.m. in Tokyo. The gauge rose 0.2% on Wednesday.
  • Futures on Japan’s Nikkei 225 were little changed.
  • Hang Seng futures earlier gained 0.2%.
  • Futures on Australia’s S&P/ASX 200 Index added 0.3%.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%.
  • The yen was at 104.44 per dollar.
  • The offshore yuan held at 6.5442 per dollar.
  • The euro bought $1.2115.

Bonds

  • The yield on 10-year Treasuries rose one basis point to 0.94%.

Commodities

  • West Texas Intermediate crude slid 0.5% to $44.94 a barrel.
  • Gold dipped 0.1% to $1,829.99 an ounce.

— With assistance by Vildana Hajric, Claire Ballentine, Dave Liedtka, and Ven Ram

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