Stocks in Asia look set to rally after U.S. benchmarks halted a three-day slide, with investors migrating to value from growth companies as signs of a strengthening labor market tempered inflation worries.
Futures pointed higher in Japan, Hong Kong and Australia. Industrial and financial shares led the advance in the S&P 500, while energy producers joined a slump in oil. The tech-heavy Nasdaq 100 posted modest gains, with Tesla Inc. slipping after Chief Executive Officer Elon Musk said the electric-car maker is suspending purchases using Bitcoin over environmental concerns. U.S. equity contracts were steady.
Bitcoin pared some of the losses sparked by Musk’s move but remains under pressure, hovering around the $50,000 level. Coinbase Global Inc. fluctuated in late trading as the biggest U.S. cryptocurrency exchange reported revenue below Wall Street estimates.
Treasuries rallied from the prior session’s weakness sparked by stronger-than-expected consumer price inflation data. The 10-year yield eased to 1.66%, despite a weak auction of 30-year bonds. The Federal Reserve tweaked its purchasing plan to focus more on longer-dated Treasuries, while leaving the $80 billion monthly total unchanged.
Markets appear to have recovered from a bout of volatility following an unexpectedly sharp increase in the U.S. consumer price index. The latest data reinforced inflation pressures, with producer prices outpacing forecasts, but a drop in jobless claims helped sentiment. Policy makers continue to argue the surge in price pressures is transitory and driven by the economic reopening.
“Taking a step back from inflation, the fact that jobless claims hit another pandemic-era low suggests we’re inching even closer to full reopening, which is no doubt a good thing,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial.
Increases in inflation above the central bank’s 2% goal should be temporary, but may last through 2022, said Fed Governor Christopher Waller.
Meanwhile, concerns about a possible pullback in Fed support have stalled the rally in commodities. Oil slumped the most in over a month as growing inflation concerns raise the specter of a less accommodative central bank.
For more markets updates see the MLIV <GO> blog.
These are some of the main moves in markets:
- S&P 500 contracts climbed 0.1% as of 7:08 a.m. in Tokyo. The S&P 500 rose 1.2%
- Nasdaq 100 futures were steady. The index rose 0.8%
- Japan’s Nikkei 225 futures were up 0.7%
- Australia’s S&P/ASX 200 futures climbed 0.7%
- Hong Kong’s Hang Seng futures rose 0.7% earlier
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro was at $1.2081
- The British pound traded at $1.4051
- The Japanese yen was at 109.44 per dollar
- The yield on 10-year Treasuries declined three basis points to 1.66%
- West Texas Intermediate crude rose 0.1% to $63.91 a barrel, after falling 3.4% in U.S. hours
- Gold futures traded at $1,826 an ounce
— With assistance by Vildana Hajric, and Kamaron Leach