Asian Stocks to Drop on Virus Angst; Dollar Gains: Markets Wrap

Asian stocks look set to open weaker after U.S. equities joined a global decline as a new variant of the coronavirus in the U.K. and a wave of lockdowns and travel restrictions damped spirits.

Futures indicated shares will drop in Japan, Australia and Hong Kong. The S&P 500 Index slipped, dragged lower by losses for Tesla Inc., which fell as much as 6% on its first day after being added to the U.S. benchmark. The yield on 10-year Treasuries retreated and the dollar climbed. Crude oil tumbled below $48 a barrel.

In Europe, the Stoxx 600 Index slumped the most since October as Italy, the Netherlands, Belgium and France closed their borders to the U.K.

Global stocks have pulled back after touching a record high last week as traders see much of the good news has already been priced in.

189,099 in U.S.Most new cases today

+10% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23

-0.​8012 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23

3.​7% Global GDP Tracker (annualized), Nov.


Progress on a $900 billion U.S. economic aid package and more positive vaccine developments were overshadowed by the emergence of the variant coronavirus strain in Britain that put a damper on the return-to-work trade that’s lately taken hold. Pfizer Inc. and BioNTech SE’s Covid-19 vaccine won the backing of a key European review panel, and a first wave of inoculations continued in the U.S.

“Fiscal stimulus is clearly fading as a catalyst, with Covid trends dictating the direction of markets,” said Emily Roland, the co-chief investment strategist at John Hancock Investment Management. “Risk assets had been shrugging off worsening virus trends, but are now showing some signs of vulnerability.”

The pound pared losses as U.K. Prime Minister Boris Johnson offered a fresh proposal to secure an 11th-hour trade deal with the European Union.

Here are some key events coming up:

  • EIA crude oil inventory report is due Wednesday.
  • U.S. jobless claims, durables, personal income data comes Wednesday.
  • U.S. bond and stock trading and markets in other parts of the world will shut early on Thursday for the Christmas holidays. Most global markets are shut Friday.

These are the main moves in markets:

Stocks

  • The S&P 500 Index sank 0.4%.
  • Nikkei 225 futures fell 0.5%.
  • Australia’s S&P/ASX 200 Index futures lost 0.4%.
  • Hong Kong’s Hang Seng Index futures were down 0.2%.

Currencies

  • The yen traded at 103.31 per dollar.
  • The offshore yuan slid 0.3% to 6.5355 per dollar.
  • The Bloomberg Dollar Spot Index rose 0.2%.
  • The euro decreased 0.2% to $1.2231.
  • The British pound slid 0.4% to $1.3463.

Bonds

  • The yield on 10-year Treasuries decreased one basis point to 0.94%.

Commodities

  • West Texas Intermediate crude sank 2.8% to $47.74 a barrel.
  • Gold fell 0.3% to $1,876.49 an ounce.

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