(Bloomberg) — Asian stocks pared losses Friday and U.S. and European futures stabilized as investors digested comments from Federal Reserve Chair Jerome Powell that fell short of trying to rein in bond yields. Treasuries held a drop.
Stocks dipped in South Korea and fluctuated in China, where officials set a conservative growth target of more than 6% for 2021 that signals restrained monetary and fiscal policies. On Thursday, the tech-heavy Nasdaq 100 extended its decline to almost 10% from February’s peak, and the S&P 500 erased nearly all its 2021 gains. U.S. and European equity futures came off their lows.
Australian bond yields surged, tracking a selloff in the U.S. 10-year that lifted the yield curve to its steepest point since 2015. Japan’s sovereign debt extended a rally after the central bank governor quashed speculation that the trading band for the 10-year might be widened. The U.S. dollar strengthened against nearly all major peers.
Oil prices leapt after the OPEC+ alliance surprised traders with its decision to keep output unchanged. Bitcoin fell with other risk assets.
Powell noted the recent runup in yields without hinting at intervention, saying that he would be “concerned by disorderly conditions.” While some investors view the rates moves as a sign of economic strength amid the recovery from the pandemic, others are growing concerned about rising inflation and the impact of higher yields on elevated stock valuations.
“It makes logical and intuitive sense that Treasury yields should move back up to 1.50% or 2%, but we are concerned with the rest of the market about the speed at which it’s getting there,” said Mona Mahajan, investment strategist at Allianz Global Investors LLC.
Stock-Market Momentum Comeuppance Gets No Sympathy From the Fed
Meanwhile, the U.S. Senate voted to take up a $1.9 trillion relief bill backed by President Joe Biden, setting off a debate expected to end this weekend with approval of the nation’s sixth stimulus since the pandemic-triggered lockdowns that began a year ago.
The February U.S. employment report on Friday will provide an update on the speed and direction of the country’s labor-market recovery.
These are some of the main moves in markets as of 7:00 a.m. in London:
Stocks
S&P 500 futures dropped 0.1%. The gauge retreated 1.3% on Thursday.Japan’s Topix index added 0.6%.South Korea’s Kospi index fell 0.6%.Australia’s S&P/ASX 200 index declined 0.7%.Hong Kong’s Hang Seng index rose 0.2%.Shanghai Composite was little changed.Euro Stoxx 50 futures slipped 0.7%.
Currencies
The Bloomberg Dollar Spot Index climbed 0.1%.The euro dipped 0.2% to $1.1951.The Japanese yen fell 0.3% to 108.30 per dollar.
Bonds
The yield on 10-year Treasuries held at 1.56%.Australia’s 10-year yield was up six basis points at 1.83%.
Commodities
West Texas Intermediate crude jumped 1.5% to $64.81 a barrel.Gold dropped 0.1% to $1,695 an ounce.
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