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Stocks, US equity futures edge up; oil climbs: markets wrap

Oil rose toward $63 a barrel with investment banks and traders predicting the market will tighten further.
Image: Qilai Shen/Bloomberg

Asian stocks and US equity futures edged higher Tuesday as investors assessed the market outlook after a jump in bond yields and commodity prices amid expectations of faster economic growth.

Hong Kong stocks outperformed, while Japan was shut for a holiday. S&P 500 contracts climbed and European futures dipped after the US index fell a fifth day. The Nasdaq 100 tumbled more than 2% on Monday as investors questioned the appeal of costlier equities after the climb in long-term borrowing costs.

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Treasuries were steady after the gap between 5- and 30-year yields touched the highest level in more than six years. Oil rose toward $63 a barrel with investment banks and traders predicting the market will tighten further.

The stock market’s rally from the depths of the pandemic almost a year ago is under scrutiny as bond yields rise. One concern is that broad benchmarks have already priced in much of the prospective global recovery spurred by vaccines and US stimulus. Another is that central banks may eventually start reconsidering emergency programs that have supported global markets.

“The timing of a pullback is even more uncertain than we previously understood,” said Lori Calvasina, head of US equity strategy at RBC Capital Markets. “One has the potential to start at any time, but may not emerge until the second half given a lack of near-term catalysts. We don’t view the recent rise in 10-year yields as a reason to turn negative on US equities for the year.”

Traders are waiting to hear from Federal Reserve Chair Jerome Powell when he testifies to the Senate Banking Committee on Tuesday and the House Financial Services panel the following day. He’s expected to play down the risk of inflation despite the size of President Joe Biden’s $1.9 trillion coronavirus relief proposal.

Elsewhere, Bitcoin retreated below $50 000 after a bout of volatility highlighted lingering doubts about the durability of the token’s mesmerising rally.

Some key events to watch this week:

  • Fed Chair Jerome Powell delivers the central bank’s semi-annual monetary policy report to the Senate Banking Committee on Tuesday.
  • EIA crude oil inventory report is out Wednesday.
  • Finance ministers and central bankers from the Group of 20 will meet virtually Friday. US Treasury Secretary Janet Yellen will be among the attendees.

These are some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.4% as of 7:22 a.m. in London. The S&P 500 Index declined 0.8%.
  • Australia’s S&P/ASX 200 index rose 0.9%.
  • South Korea’s Kospi index fell 0.3%.
  • Hong Kong’s Hang Seng Index added 1.2%.
  • Shanghai Composite Index dipped 0.2%.
  • Euro Stoxx 50 futures fell 0.1%.

Currencies

  • The yen traded little changed at 105.18 per dollar.
  • The offshore yuan rose 0.1% to 6.4633 per dollar.
  • The Bloomberg Dollar Spot Index slipped 0.1%.
  • The euro was as at $1.2170, up 0.1%.

Bonds

  • The yield on 10-year Treasuries was at 1.36%.
  • Australia’s 10-year bond yield dipped four basis points to 1.56%.

Commodities

  • West Texas Intermediate crude rose 1.1% to $62.39 a barrel.
  • Gold added was at $1809.76 an ounce.
© 2021 Bloomberg

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