Asian stocks dip, futures steady before payrolls: markets wrap

Most Asian stocks dipped Friday as traders weighed the spread of the delta coronavirus strain against a record Wall Street close while awaiting key US payrolls data. A gauge of the dollar climbed.

Shares fell in China, where Beijing’s regulatory crackdown and a warning about a possible downward spiral at China Evergrande Group — the world’s most indebted developer — hit sentiment. Alibaba Group Holding anticipates that Chinese government tax breaks for the internet industry will start to dwindle, swelling costs. Japan fluctuated, with Nintendo Co. weighing after a profit miss.

US contracts were little changed in the wake of fresh peaks for the S&P 500 and Nasdaq 100 on solid earnings. An overnight release showing a second weekly drop in US jobless claims stoked some expectations for a strong payrolls report Friday that could spark market swings. Treasuries retreated.

Crude oil headed for one of its biggest weekly losses this year on demand risks from Covid-19. Australia’s dollar was the weakest performer among Group of 10 currencies after the nation’s central bank governor Philip Lowe said a lower exchange rate from monetary stimulus was welcome.

Trader focus is firmly on the US payrolls report. Weak data could exacerbate concerns that the bounce back from the pandemic is losing steam. A robust number stands to benefit reflation trades linked to economic reopening — providing markets aren’t spooked by the argument that such data strengthen the case for the Federal Reserve to taper massive stimulus support.

“While uncertainty over monetary policy is likely to cause further bouts of volatility, we believe the Fed’s move toward tapering is unlikely to prompt a reversal of the equity rally,” Mark Haefele, chief investment officer for global wealth management at UBS Group AG, wrote in a note, adding cyclical and value sectors can climb.

In the latest Fed comments, Governor Christopher Waller said he’s positive about the outlook and that accommodative policy could be pulled back sooner than some people expect. Minneapolis President Neel Kashkari expects a strong labor market in the fall but also flagged risks from the delta virus variant.

Senator Joe Manchin urged Chair Jerome Powell to start tapering the Fed’s $120 billion in monthly bond purchases, arguing in a letter that the US economy is at risk of overheating and saddling Americans with “unavoidable inflation taxes.”

The spread of the delta strain continues to complicate plans to return life to some kind of normal. Companies including Amazon.com Inc., BlackRock Inc. and Wells Fargo & Co. delayed their return-to-office plans. Analysts are monitoring both the US and China for signs of the variant hampering recoveries.

In cryptocurrencies, Bitcoin dipped toward $40 000 and Ether trimmed a rally sparked by a software upgrade that will trim the pace at which tokens are minted.

Here are some key events to watch this week:

• Reserve Bank of India monetary policy decision, briefing Friday
• The US jobs report is expected to show another robust month of hiring Friday

These are the main moves in markets:

Stocks

• S&P 500 futures were flat as of 7:05 a.m. in London. The S&P 500 rose 0.6%
• Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.7%
• Japan’s Topix index was steady
• Australia’s S&P/ASX 200 index added 0.1%
• South Korea’s Kospi lost 0.3%
• Hong Kong’s Hang Seng index was steady
• China’s Shanghai Composite index slipped 0.7%
• Euro Stoxx 50 futures were steady

Currencies

• The Bloomberg Dollar Spot Index added 0.1%
• The euro was at $1.1827, down 0.1%
• The Japanese yen was at 109.83 per dollar, down 0.1%
• The offshore yuan was at 6.4621 per dollar

Bonds

• The yield on 10-year Treasuries rose one basis point to about 1.24%
• Australia’s 10-year bond yield increased about three basis points to 1.18%

Commodities

• West Texas Intermediate crude was at $69.35 a barrel, up 0.4%
• Gold was at $1801.43 an ounce, falling 0.2%