A gauge of Asia-Pacific shares fell the most in about two weeks, with value and cyclical sectors struggling. Hong Kong equities underperformed, nearing a correction, amid the city’s decision to temporarily suspend BioNTech SE vaccines. The S&P 500 fell Tuesday and reopening favorites like the small-cap Russell 2000 slumped. S&P 500 futures edged lower and Nasdaq 100 contracts rose.
U.S. bond yields headed for a third day of declines after Federal Reserve Chairman Jerome Powell played down inflation risks. A solid two-year Treasury auction helped allay concerns that poor appetite for this week’s sales could stoke yields. The rate on New Zealand’s 10-year note slumped as traders pulled back positions for early rate hikes.
Oil held below $60 a barrel after tumbling Tuesday. Renewed lockdowns in Europe further clouded the prospects for a speedy recovery in consumption.
Market sentiment has faltered on doubts about the progress of the global economic reopening. Germany, France and Italy have widened virus-related curbs and infections are spiking elsewhere. The head of the World Health Organization called recent increases in deaths and cases “truly worrying trends.” These concerns are adding to the ripple effects of quarter-end portfolio rebalancing across markets.
At the same time, the U.S. government plans more measures to spur growth. Treasuries have benefited from the central bank’s latest assurances of continued support. These are reminders of the fragility of the recovery as investors contemplate the 75% rally in the S&P 500 since its bear-market trough a year ago.
“We have a lot of innovation happening, incredible advancement in health-care technology, rapid vaccine development,” Dune Thorne, a partner at Brown Advisory LLC, said on Bloomberg TV. “But at the same time, there’s risk around inflation and rising rates and the impact that will have on equities.”
These are some key events to watch this week:
The U.S. Treasury holds auctions of five- and seven-year debt.EIA crude oil inventory report on Wednesday.U.S. personal income and spending data on Friday.
These are some of the main moves in financial markets:
Stocks
S&P 500 futures were little changed as of 3:05 p.m. in Tokyo. Nasdaq 100 futures rose 0.2%. The S&P 500 Index fell 0.8%.Japan’s Topix Index slid 2.2%.Australia’s S&P/ASX 200 Index rose 0.5%.South Korea’s Kospi Index fell 0.3%.Hong Kong’s Hang Seng Index fell 2.3%.China’s CSI 300 Index fell 1.8%.Euro Stoxx 50 futures fell 0.6%.
Currencies
The yen was at 108.51 per dollar.The Bloomberg Dollar Spot Index ticked up 0.1%.The euro was at $1.1841.The British pound traded at $1.3713, down 0.3%.
Bonds
The yield on 10-year Treasuries fell two basis points to 1.60%.Australia’s 10-year bond yield slid eight basis points to 1.65%.
Commodities
West Texas Intermediate crude was at $57.92 a barrel, retracing almost half its 6.2% drop on Tuesday.Gold was at $1,732.50 an ounce, rising 0.3%.
