Asian stocks looked primed for a lackluster start to trading Wednesday after their U.S. peers closed little changed and Treasury yields fluctuated around a 10-month high. The dollar retreated.
Futures pointed to little movement in Japan, Hong Kong and Australia. S&P 500 contracts edged down after the index fluctuated between gains and losses before closing flat on Tuesday. Energy, materials and the consumer discretionary sectors were the best performers as investors mulled the prospects of an economic recovery. Crude oil approached a 11-month high as the dollar fell back after a three-day rally. Corn futures surged on a tighter-than-expected supply outlook.
Ten-year Treasury yields pared an earlier rise after a government auction was met with solid demand. The spread between the rate on the two- and 10-year notes had risen every single day this year as investors bet on additional U.S. fiscal stimulus, more bond issuance and higher yields on longer-maturity Treasuries.
While progress on a vaccine is providing hope to investors banking on an economic recovery, there are lingering concerns over the speculative excess and froth that’s driven stock markets to all-time highs in the middle of a pandemic. Two Federal Reserve officials pushed back on speculation that the central bank will begin to taper its asset-purchase program any time soon.
“What I think investors are most focused on is the digesting of what is shifting fiscal policy,” said David Bianco, chief investment officer of the Americas at DWS Group. “We’re beginning to lose the anchor on some long-term key benchmark interest rates.”
In Washington, the House is moving forward on an expected vote to impeach the President Donald Trump for the second time in little more than a year.
Elsewhere, Bitcoin saw modest gains to trade back above the $34,000 level. Gold held gains.
Federal Reserve rate actions have had a coercive affect on the markets and forced investors to move into risk assets, according to Oaktree Capital Group co-founder Howard Marks.
Here are some key events coming up:
- JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., as well as firms ranging from Taiwan Semiconductor Manufacturing Co. to Infosys Ltd., are among those due to report earnings.
- EIA crude oil inventory report is due Wednesday.
- European Central Bank’s Christine Lagarde speaks at an online conference Wednesday.
- U.S. consumer-price inflation figures are due Wednesday.
- U.S. President-elect Joe Biden plans to lay out proposals for fiscal support on Thursday.
- Federal Reserve Chairman Jerome Powell takes part in a webinar on Thursday.
- U.S. initial jobless claims data are due Thursday.
- U.S. retail sales, industrial production, business inventories and consumer sentiment figures are due Friday.
These are some of the main moves in markets:
Stocks
- S&P 500 futures slipped 0.1% as of 8:03 a.m. in Tokyo. The gauge was little changed on Tuesday.
- Futures on Japan’s Nikkei 225 dipped 0.1%.
- Hang Seng futures declined 0.1%.
- Futures on Australia’s S&P/ASX 200 Index dropped 0.1%.
Currencies
- The Bloomberg Dollar Spot Index dropped 0.6%.
- The yen was at 103.76 per dollar.
- The euro bought $1.2208.
- The offshore yuan traded at 6.4441 per dollar.
Bonds
- The yield on 10-year Treasuries fell two basis points to 1.13%.
Commodities
- West Texas Intermediate crude climbed 0.2% to $53.32 a barrel.
- Gold was at $1,854.66 an ounce.
— With assistance by Kamaron Leach, Dave Liedtka, and Nancy Moran
