Stocks dip from record as dollar, yields edge up: markets wrap

Global stocks retreated from a record high as traders weighed rising price pressures in China against Federal Reserve Chair Jerome Powell’s pledge of a recovery without surging inflation.

Chinese stocks slid Friday, dragging on MSCI Inc.’s Asia-Pacific share gauge, after data showed the nation’s fastest factory inflation since 2018. US equity futures erased earlier gains and European contracts fluctuated. The S&P 500 notched an all-time high overnight amid low volumes on US exchanges, while the Nasdaq 100 rose 1%.

Ten-year Treasury yields inched up from the two-week low touched earlier on Powell’s reassurance. Treasury 20-year bonds had outperformed after comments from New York Fed Executive Vice President Lorie Logan sparked talk of the central bank boosting purchases in this maturity. The dollar rallied but remained on course to break three straight weeks of gains.

Oil fluctuated below $60 a barrel as Saudi Arabia defended the OPEC+ plan to boost output, and said the alliance can change course if needed.

The Fed commentary reassured investors of the central bank’s commitment to dovish policy that fosters a sustainable rebound from the health crisis. Powell said policy makers would react if inflation expectations started “moving persistently and materially” above tolerable levels. Despite the strength of some indicators, the recovery remains incomplete, as reflected in the latest unexpectedly high US jobless claims.

“A lot of investors are worried about the stock-market highs, but that doesn’t mean it can’t get higher, and the economic conditions are certainly set up for a positive equity environment,” said Xi Qiao, managing director at UBS Global Wealth Management, on Bloomberg TV.

The US outlook is greatly improved, but remains at risk from potential setbacks in the global economy as the vaccine rollout “hasn’t been nearly as robust in many countries,” San Francisco Fed President Mary Daly said in a Bloomberg interview.

More than 704 million shots have been administered worldwide, but uncertainty over risks associated with the AstraZeneca vaccine has slowed the process in some countries. China is among countries facing fresh hurdles as its effort to vaccinate 560 million people by the end of June runs into a supply shortage.

These are some of the main moves in markets:

Stocks

• S&P 500 futures were flat as of 7 a.m. in London. The S&P 500 closed 0.4% higher.
• Nasdaq 100 futures slid 0.1% after the index gained 1%.
• Japan’s Topix Index was up 0.4%.
• South Korea’s Kospi Index shed 0.4%.
• Australia’s S&P/ASX 200 Index was 0.1% lower.
• Hong Kong’s Hang Seng Index lost 1.3%.
• China’s Shanghai Composite Index fell 1.1%.
• Euro Stoxx 50 futures added 0.1%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%.
• The euro slipped 0.2% to $1.1894.
• The Japanese yen traded at 109.43 per dollar, down 0.2%.

Bonds

• The yield on 10-year Treasuries rose three basis points to 1.65%.
• Australia’s 10-year bond yield was at 1.75%.

Commodities

• West Texas Intermediate crude fell 0.1% to $59.55 a barrel.
• Gold was 0.3% lower at about $1 749 an ounce.