Asian stocks opened with declines as investors assess how rising borrowing costs could impact the equity rally. Treasuries retained losses.
Australian and Japanese shares slipped, though Korea saw modest gains, while futures on the S&P 500 dipped. U.S. gauges retreated overnight. A report earlier showed initial jobless claims rose more than expected. Ten-year Treasury yields topped out at 1.32% on Thursday. Crude oil extended a retreat amid a crisis caused by a U.S. cold snap. The dollar was steady against most G-10 peers.
The pound touched the strongest level versus the euro since March on continued optimism over the nation’s vaccine rollout. Bitcoin retreated to below $52,000. Lumber futures climbed to a record on Thursday and copper in London hit a fresh eight-year high.
With benchmark Treasury yields hovering around a 12-month high, investors are debating whether a further rise might trigger a shake-out in risk assets. Still, the pause in the bond-market selloff is a reminder of the fragility of the global growth backdrop, with much depending on the success of the coronavirus vaccine rollout.
“There are so many assets that are priced on really low rates forever,” Evan Brown, head of multi-asset strategy at UBS Asset Management, said on Bloomberg TV. “As soon as you do get a hint of this idea that long-term rates are not going to be zero forever, then those are going to be the most vulnerable assets.”
Meantime, the global oil market is grappling with the weather crisis in the U.S., which will likely keep refineries shut for another week. More than 4 million barrels a day of output -- almost 40% of the nation’s crude production -- is now offline, according to traders and executives.
Former Counsel to the U.S. Senate Tyler Gellasch, and Compass Point Research’s Director of Policy Research Isaac Boltansky discuss the U.S. House Financial Services Committee hearing Thursday on the recent Reddit-fueled stock volatility.
Source: Bloomberg
These are some of the main moves in markets:
Stocks
- S&P 500 futures slid 0.1% as of 9:06 a.m. in Tokyo. The gauge slipped 0.4% on Thursday.
- Japan’s Topix index fell 0.6%.
- South Korea’s Kospi rose 0.4%.
- Australia’s S&P/ASX 200 Index declined 0.6%.
Currencies
- The yen was at 105.65 per dollar.
- The offshore yuan traded at 6.4589 per dollar.
- The euro bought $1.2095.
- The pound climbed to $1.3975.
Bonds
- The yield on 10-year Treasuries was at 1.29%.
Commodities
- West Texas Intermediate crude declined 1.2% to $59.79 a barrel.
- Gold was at about $1,772 an ounce.
— With assistance by Lu Wang, Claire Ballentine, and Joanna Ossinger