U.S. equity futures retreated and Asian stocks were mixed Tuesday following weakness among the technology giants on Wall Street. The dollar rallied.
Taiwan’s benchmark bore the brunt of a sell-off, shedding as much as 3.3%, after beating all other major gauges globally in April. South Korean shares edged down while Hong Kong and Australia rose modestly. Trading will be limited with Japan and China among markets closed for holidays. U.S. contracts fell after the S&P 500 ended near session lows and shares such as Tesla Inc. and Amazon.com Inc. weighed on the Nasdaq 100.
Ten-year Treasury yields dropped back to around 1.6% in U.S. trade amid comments from Federal Reserve Chair Jerome Powell that the economic recovery is patchy.
A gauge of commodity prices is at the highest level since 2012. Silver is among the precious metals that have rallied as the prospect of near-zero rates for longer boosts demand. Oil was steady after climbing over 1%. Digital token Ether extended its surge to set another record.
Why Sell in May?
Recent history shows staying with U.S. stocks may pay off in the next six months
Source: Bloomberg
Data showed growth among U.S. manufacturers cooled in April, while a gauge of prices paid for materials jumped to the highest since 2008. The figures were a reminder that the rebound from the pandemic still faces risks, such as faster inflation. Powell reiterated progress in the recovery has been uneven across racial and income divides. New York Fed President John Williams said current conditions are “not nearly enough” for a shift in the monetary policy stance.
“We do believe that inflationary pressures will continue this year and that’s driven by the kind of policy we have seen globally,” Rupal Agarwal, a quantitative strategist at Sanford C Bernstein, said on Bloomberg TV. “In the shorter term you can expect some pullback in the markets but the broader sentiment remains bullish” as the reopening and reflation trade remains in force, she said.
Markets seem to be looking through the persistent threat of the pandemic, focusing instead on the relative success of the vaccine rollouts in much of the developed world. Meanwhile, fierce new Covid-19 waves are enveloping India and parts of Southeast Asia, placing severe strain on their health-care systems and prompting appeals for help.
Here are some key events to watch this week:
- U.S. trade balance, factory orders, durable goods are due Tuesday
- The Reserve Bank of Australia monetary policy decision is coming Tuesday
- Chicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College on Wednesday. Cleveland Fed President Loretta Mester gives a virtual speech to the Boston Economic Club
- Bank of England rate decision Thursday
- The April U.S. employment report is released on Friday
These are some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.3% as of 11 a.m. in Hong Kong. The S&P 500 rose 0.3%. Nasdaq 100 contracts slipped 0.3%
- Australia’s S&P/ASX 200 Index rose 0.4%
- South Korea’s Kospi shed 0.4%
- Hong Kong’s Hang Seng Index rose 0.4%
- Taiwan’s Taiex fell 2.2%
- Euro Stoxx 50 futures fell 0.1%
Currencies
- The yen fell 0.2% to 109.23 per dollar
- The offshore yuan was at 6.4762 per dollar
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro traded at $1.2045, down 0.2%
Bonds
- Ten-year Treasury futures were little changed. The yield on 10-year Treasuries declined almost three basis points to 1.60%. Cash Treasuries won’t trade in Asia Tuesday
- Australia’s 10-year bond yield fell almost two basis points to 1.74%
Commodities
- West Texas Intermediate added 0.1% to $64.58 a barrel
- Gold was down 0.1% to $1,790.31 an ounce after climbing 1.3%
— With assistance by Rita Nazareth, and Claire Ballentine
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