Asia stocks dip with US futures; dollar edges up: markets wrap

Asian stocks slipped Monday as investors weighed an uneven global recovery from the pandemic against the latest upbeat US outlook from Federal Reserve Chair Jerome Powell. The dollar ticked up.

Markets in China and Hong Kong lagged, despite a rally in Alibaba Group Holding Ltd. after the weekend announcement of a record antitrust fine removed a regulatory overhang. India’s Sensex slumped to a 10-week low as daily Covid-19 infections spiked. US equity futures retreated following a third straight week of gains for the S&P 500 Index, with investors bracing for earnings reports. European contracts were slightly in the red.

The yield on 10-year Treasuries held Friday’s advance on stronger-than-expected producer-price inflation data and ahead of a heavy week of supply.

While the US recovery is accelerating, economies are still at risk from rising Covid-19 cases and vaccination setbacks. Traders are also concerned that massive government spending and central-bank stimulus could drive excessive inflation. US consumer-price data are due Tuesday.

The US economy is at an “inflection point” with stronger growth and hiring ahead thanks to rising vaccinations and powerful policy support, Powell told CBS’s 60 Minutes in an interview aired Sunday. He said any rebound in inflation will be temporary.

“The big thing markets are trying to price currently is what does the world look like with another period of US economic outperformance,” said Kyle Rodda, analyst at IG Markets Ltd. “Europe can’t get its economic or health affairs in order, China doesn’t look like it wants to run its economy too hot.”

Bond investors will be watching this next round of U.S. government auctions as a potential catalyst for another leg higher in yields. The US sells three-, 10- and 30-year Treasuries at the start of the week.

Oil was steady in Asian trading and Bitcoin was at about $60 000, not far from its all-time high. The forthcoming listing of cryptocurrency exchange Coinbase Global Inc. in the US has put the spotlight back on the digital-token sector.

Elsewhere, traders will be watching for any further escalation between Russia and Ukraine, after Russia warned that growing violence in Ukraine could set off a broader military conflict. Microsoft Corp. will also be in focus, after people familiar with the matter said the company may announce the deal as soon as Monday for Nuance Communications Inc.

Some key events to watch this week:

• Banks and financial firms begin reporting first-quarter earnings, including JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., Morgan Stanley, Goldman Sachs Group Inc.
• U.S. officials and company executives are due to discuss the global shortage of computer chips on Monday.
• The US releases inflation data Tuesday.
• Chinese trade data are scheduled for Tuesday.
• Economic Club of Washington hosts Fed Chair Jerome Powell for a moderated Q&A on Wednesday.
• US Federal Reserve releases Beige Book on Wednesday.
• US data including initial jobless claims, industrial production and retail sales come Thursday.
• China economic growth, industrial production and retail sales figures are on Friday.

These are some of the main moves in financial markets:

Stocks

• S&P 500 futures dipped 0.3% as of 7:26 a.m. in London. The index rose 0.8% on Friday.
• Japan’s Topix Index fell 0.3%.
• China’s Shanghai Composite fell 1%.
• Hong Kong’s Hang Seng dropped 1%.
• South Korea’s Kospi Index added 0.1%.
• Australia’s S&P/ASX 200 slipped 0.3%.
• Euro Stoxx 50 contracts lost 0.1%.

Currencies

• The Bloomberg Dollar Spot Index edged up 0.1%.
• The yen was up 0.1% at 109.57 per dollar.
• The euro slipped 0.1% to $1.1891.
• The offshore yuan was at 6.5557 per dollar.

Bonds

• The yield on 10-year Treasuries steadied around 1.65%.
• Australia’s 10-year yield edged up to 1.78%.

Commodities

• West Texas Intermediate crude fell 0.4% to $59.08 a barrel.
• Gold was down 0.2% at $1,740.16 an ounce.