Asia Set for Beneficial properties After Tech Rally; Yields Drop: Markets Wrap

(Bloomberg) — Asian stocks looked set for gains Friday after U.S. technology shares rallied and Treasuries advanced, with investors unwinding some of this year’s dominant reflation trades. The dollar climbed and commodities slumped.

Futures pointed higher in Japan, Australia and Hong Kong. The tech-heavy Nasdaq 100 rose to a record high as investors rotated from cyclical stocks, while the benchmark S&P 500 ended little changed. Treasury yields tumbled amid speculation investors were unwinding curve steeping trades after Federal Reserve officials signaled monetary policy tightening could start earlier than expected, helping to rein in the risk that inflation might get out of hand.

The Bloomberg Dollar Spot Index rose for a fifth day, the longest winning streak since March 2020, making commodities that are priced in the currency more expensive. Copper led an index of commodities lower. Gold tumbled to below $1,800 an ounce and oil fell.

Some investors have interpreted comments from Fed Chair Jerome Powell following the Fed meeting as preparing markets for a hawkish tilt and an eventual tapering. A faster-than-expected pace of tightening would mark a turning point in the Fed’s communication to global markets, which had so far been ultra-dovish.

Copper fell in London to the lowest in two months. The rally in metals has stalled in recent weeks and copper has retreated from last month’s record as concerns about cost pressures spurred expectations stimulus that had been supporting the global recovery would be scaled back.

Read: Stock-Market Doldrums Face Shake-Up With Friday’s ‘Witching’

For more market commentary, follow the MLIV blog.

Here are some key events to watch this week:

The Bank of Japan’s monetary policy decision is on Friday

These are some of the main moves in markets:

Stocks

The S&P 500 was little changedThe Nasdaq 100 rose 1.3%Nikkei 225 futures rose 0.3%Australia’s S&P/ASX 200 Index futures added 0.5%Hang Seng Index futures climbed 0.3%

Currencies

The Japanese yen was at 110.25 per dollar after gaining 0.4%The offshore yuan traded at 6.4575 per dollarThe Bloomberg Dollar Spot Index rose 0.6%The euro was at $1.1907

Bonds

The yield on 10-year Treasuries declined seven basis points to 1.50%

Commodities

West Texas Intermediate crude fell 1.5% to $71.04 a barrelGold tumbled 2.1% to $1,773.55 an ounce

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