Stocks drop on fresh virus concerns; yields steady: markets wrap

Asian stocks tumbled and US futures declined Wednesday as rising virus cases around the world led to renewed concern about their economic impact. Treasuries held overnight gains.

An MSCI Inc. gauge of Asia-Pacific shares was on track for its biggest drop in four weeks with Japan and Hong Kong leading. Nasdaq 100 futures underperformed. S&P 500 contracts fell after the benchmark dropped for a second day, extending its slide from an all-time high, with investors showing caution ahead of the brunt of the earnings season. Treasuries held a rally that sent the 10-year yield to its lowest level in more than five weeks. The dollar edged higher. Oil prices retreated.

After rising to record highs, stocks find themselves under pressure from a renewed surge in Covid-19 case around the world, raising the prospect of new lockdowns and hampering the economic recovery. Tokyo and Osaka will ask the Japanese government to declare a state of emergency. Glitches with vaccine rollouts are also raising concerns about the pace of reopenings.

“The data is very mixed: on the positive side we have great vaccine rollouts that are happening and then the negative is that we have J&J being halted,” Julie Biel, portfolio manager at Kayne Anderson Rudnick, said on Bloomberg TV. “Is that going to create more vaccine hesitancy? How much of that is going to impact longer term the ability to reopen?” The end of the pandemic “is going to be much more of a push-pull, it’s going to happen in increments,” she said.

The World Health Organisation said coronavirus cases are rising in all regions except Europe, with India driving a surge in Asia.

Elsewhere, gold cemented an advance amid the risk-off move. Bitcoin fell for the fifth time in six days.

Here are some key events to watch this week:

• EIA crude oil inventory report on Wednesday.
• European Central Bank rate decision and President Christine Lagarde briefing on Thursday.
• US releases new home sales data Friday.

These are some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 2:20 p.m. in Tokyo. The S&P 500 decreased 0.7%. The Nasdaq 100 dipped 0.7%
• Topix index fell 2%
• Australia’s S&P/ASX 200 Index dropped 1.7%
• Kospi index fell 1.7%
• Hang Seng Index lost 1.8%
• Shanghai Composite Index rose 0.1%
• Euro Stoxx 50 futures rose 0.2%

Currencies

• The yen traded at 108 per dollar, up 0.1%
• The offshore yuan was at 6.4971 per dollar
• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was little changed at $1.2029

Bonds

• The yield on 10-year Treasuries held at 1.56%
• Australia’s 10-year bond yield fell five basis points to 1.73%

Commodities

• West Texas Intermediate crude fell 0.8% to $62.18 a barrel
• Gold was at $1 783.21 an ounce, up 0.3%