Dollar rises, Asian stocks mixed, US futures dip: markets wrap

(BLOOMBERG) – The dollar climbed Monday (Jan 11) and Asian stocks were mixed as traders weighed President-elect Joe Biden’s pledge to detail huge US economic aid to counter the impact of the escalating pandemic.

The dollar rose against major peers, while Australian shares and S&P 500 futures dipped. South Korean equities outperformed. The yen fluctuated after Japanese authorities found a coronavirus variant similar to strains in the UK and South Africa. Japan’s equity market is shut for a holiday and cash Treasuries won’t trade until the London open.

US stocks notched another record Friday after Biden said he’ll lay out proposals this week for trillions of dollars in fiscal support to fight the economic toll of surging coronavirus cases. Oil held last week’s jump and gold added to Friday’s losses.

Equity gauges and Treasury yields have climbed on expectations of a global recovery driven by stimulus and eventual control of the pandemic with the help of vaccines. Investors have so far tolerated stretched stock valuations and some signs that global shares may be running too hot.

“After being bullish for several months, we are definitely becoming more cautious on the stock market up at these levels,” Matt Maley, the chief market strategist at Miller Tabak +, wrote in a note, adding that the bulk of the S&P 500 rally from March lows is “behind us”.

The Democratic Party under Biden is set to control both houses of Congress once he takes charge, but winning assent for ambitious outlays – such as US$2,000 stimulus checks – may yet be a challenge in a Senate that will be split 50-50 with Republicans.

Meanwhile, President Donald Trump enters the final days of his presidency facing an impeachment resolution after being blamed for inciting last week’s deadly riot at the US Capitol.

One of the policy difficulties Biden will inherit at his inauguration next week is the escalating tension with Beijing. The Trump administration said Saturday the US will remove self-imposed curbs on diplomatic interactions with Taiwan, a step likely to irk China, which claims the island as its territory.

On the virus front, Japan said it found the new strain of the coronavirus in passengers arriving from Brazil. The Asian nation said it’s difficult to immediately determine how infectious the strain is or the effectiveness of current vaccines against it.

Traders will be assessing earnings this week, including reports from JPMorgan Chase & Co and Citigroup. Elsewhere, Bitcoin retreated from the high of about US$42,000 it reached on Friday.

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