Stocks retreat amid virus curbs; dollar steady: markets wrap

Asian stocks retreated with European futures Tuesday after a mixed Wall Street session, amid caution over economic risks from virus-related curbs and ongoing US fiscal stimulus talks. The dollar steadied.

A gauge of Asia-Pacific equities was set for its worst drop this month as shares fell in South Korea, Hong Kong and Japan, where the government suspended its nationwide travel campaign amid record coronavirus cases. Australian coal stocks slid on reports China formally banned imports. S&P 500 contracts edged higher after the gauge capped its longest slide since September to trade about 1.5% below its December 8 record. Oil fell and Treasury yields were little changed.

Investor optimism about the start of vaccine shots has given way to concern over whether a stimulus bill from a bipartisan group of lawmakers will gain traction. The virus continued to rage in the US, threatening harsher restrictions across the nation. New York City Mayor Bill de Blasio warned that people should be prepared for a full shutdown. European governments are also tightening measures.

“Signs of market fatigue are more prevalent today than a month ago, even as the popular average is near all-time highs,” wrote Paul Nolte, a portfolio manager at Kingsview Investment Management. “The much-awaited correction could come as investors tire of Washington, worry about the Covid cases over the holidays, or some other concern that is likely to pass in a few months.”

Elsewhere, industrial output and retail sales data showed China’s recovery gathered pace in November, putting the economy further ahead of its peers as the only major one likely to expand this year. The nation injected cash into its financial system by offering medium-term loans, in the latest effort to ensure banks have sufficient liquidity. The yuan ticked lower.

Meanwhile, President-elect Joe Biden sought to dispel any questions about the legitimacy of his election victory and called on the American people to accept the outcome hours after the Electoral College sealed his win.

Here are some key events coming up:

• The Federal Reserve meets Tuesday and Wednesday, with markets widely expecting fresh guidance on its continued asset purchases.
• Policy decisions from the Bank of England and central banks in Mexico, Switzerland and Indonesia are due Thursday. Japan and Russia announce decisions Friday.

These are the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 7 a.m. in London. The S&P 500 Index fell 0.4% Monday.
• Japan’s Topix Index fell 0.5%.
• S&P/ASX 200 Index shed 0.4%.
• Kospi Index fell 0.2%.
• Hang Seng Index dipped 0.6%.
• Shanghai Composite Index declined 0.1%.

Currencies

• The Bloomberg Dollar Spot Index was steady after decreasing 0.2% Monday.
• The euro was at $1.2147.
• The Japanese yen was at 104.05 per dollar.
• The British pound rose 0.1% to $1.3343.

Bonds

• The yield on 10-year Treasuries was at 0.89%.

Commodities

• West Texas Intermediate crude fell 0.5% to $46.75 a barrel.
• Gold added 0.7% to $1,840 an ounce.