Stocks, futures drift after tech, bonds rally: markets wrap

Asian stocks drifted with US and European futures Friday after a rally in technology shares and Treasuries Thursday, as investors unwound some of this year’s dominant reflation trades. The dollar held gains and commodities steadied after overnight losses.

Equities saw modest gains in Hong Kong and Australia, and slipped in Japan after a central bank meeting. In China, shares pared a retreat as US regulators proposed a ban on products from Huawei Technologies Co. and four other Chinese electronics companies. Nasdaq 100 futures outperformed after a fresh bout of rotation from cyclical stocks pushed the tech-heavy gauge to another record. The S&P 500 ended the US session flat. European futures were little changed.

Treasury yields held a slide spurred by speculation investors were unwinding bets on a steeper curve, after Federal Reserve officials signaled monetary-policy tightening could start sooner than previously thought, helping to rein in the risk that inflation might get out of hand.

Australia’s three-year bond yields shot up after an influential economist said he expects the central bank to raise key interest rates in early 2023. Copper is headed for its worst week since the start of the pandemic and oil slipped Friday. An advance in the dollar this week has made commodities that are priced in greenback more expensive, driving declines across the complex.

The yen was little changed after the Bank of Japan maintained its policy rate and said it would extend its Covid support program.

Investors are now debating when the Federal Reserve is likely to start trimming its monthly bond purchases, after Chairman Jerome Powell flagged in his post-meeting press conference that policy makers are ready to discuss the prospect. The meeting also showed the central bank is likely to start raising interest rates sooner than its prior guidance suggested, with two hikes penciled in by the end of 2023.

“What we are seeing here is an interpretation that economic growth is improving and inflation is accelerating; historically both of those are positive for areas like the Nasdaq, tech stocks and even small caps,” Dave Mazza, Direxion managing director and head of product. “Once we peel the onion a bit, what we are seeing in the data, all of this is generally positive for the economy.”

These are some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 7:09 a.m. in London. The S&P 500 ended the session roughly flat
• Nasdaq 100 futures gained 0.3%. The Nasdaq 100 rose 1.3%
• Japan’s Topix index slipped 0.9%
• South Korea’s Kospi index rose 0.2%
• Australia’s S&P/ASX 200 Index gained 0.2%
• Hang Seng Index Index rose 0.7%
• Shanghai Composite Index rose 0.1%
• Euro Stoxx 50 futures were flat

Currencies

• The Japanese yen was at 110.07 per dollar, up 0.1%
• The offshore yuan rose 0.1% to 6.4516 per dollar
• The Bloomberg Dollar Spot Index was little changed
• The euro was at $1.1898, down 0.1%

Bonds

• The yield on 10-year Treasuries edged up a basis point to 1.51%
• Australia’s 10-year bond yield fell four basis points to 1.60%

Commodities

• West Texas Intermediate crude slipped 0.4% to $70.74 a barrel
• Gold was at $1 784.32 an ounce, up 0.6%