Asia Stocks Set to Follow U.S. Lower; Dollar Gains: Markets Wrap

(Bloomberg) -- Asian stocks looked set for a muted start Tuesday after U.S. stocks fell for the first time in five sessions with equity prices near all-time highs. The dollar strengthened against all its major peers.

Futures pointed lower in Japan, where markets reopen after a holiday, and Hong Kong. The S&P 500 was led lower by the real estate and consumer discretionary sectors, while energy companies were the biggest gainers. Weighing on the minds of investors are worries that equities are running too hot and valuations are stretched at a time when major parts of the world are grappling with the worst of the Covid-19 pandemic. Ten-year Treasury yields climbed to almost 1.15%, the highest level since March.

After benchmark Treasury yields topped 1% last week on bets that Democratic lawmakers will enact big spending packages to drive the economic recovery out the pandemic, investors are mulling whether higher yields might jeopardize the current environment of easy financial conditions. The move has reset expectations for a range of asset classes.

“Ultimately it goes back to the 10- year,” wrote KC Rajkumar and Jahanara Nissar of Lynx Equity Strategies. A higher yield “points to higher inflation down the road -- which is negative for stocks. We are not there yet, but as the 10-year inches higher -- the closer we get.”

Twitter Inc. fell after the social media platform permanently banned President Donald Trump after a mob invaded the Capitol building last week. Shares of Facebook Inc., which also suspended Trump’s account, also declined.

House Democrats Monday introduced a resolution to impeach Trump for a second time, setting up a vote this week unless Vice President Mike Pence uses his constitutional authority to remove the president.

Elsewhere, Bitcoin tumbled, with prices sliding as much as 20% on Monday. Some investors have said the digital currency’s recent gains defy logic and the U.K.’s financial watchdog issued a statement that consumers in crypto should be prepared to lose all their money.

Commodities were broadly lower on the back of the stronger dollar, with West Texas Intermediate oil trading near $52 a barrel.

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.
• Biden plans to lay out proposals for fiscal support on Thursday.
• Fed Chair 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

• The S&P 500 index fell 0.6%.
• Nikkei 225 futures fell 0.8%.
• Australia’s S&P/ASX 200 futures were little changed.
• Hong Kong’s Hang Seng futures fell 0.5%.

Currencies

• The Bloomberg Dollar Spot Index advanced 0.5%.
• The yen fell 0.2% to 104.19 per dollar.
• The euro fell 0.5% $1.2153.
• The pound lost 0.4% to $1.3517.
• The offshore yuan fell 0.2% to 6.4784 per dollar.

Bonds

• The yield on 10-year Treasuries rose three basis points to 1.146%.

Commodities

• West Texas Intermediate crude fell 0.2% to $52.16 a barrel.
• Gold dipped 0.2% to $1,845 an ounce.