(Bloomberg) — Asian stocks and U.S. futures fell Monday on concerns about the impact of Covid-19 outbreaks and elevated inflation on economic prospects. Treasuries climbed and oil slipped after an OPEC+ supply deal.
Shares fell across the region, with Japan and Hong Kong underperforming. China opened with more modest losses. S&P 500 and Nasdaq 100 futures dropped after the S&P 500 fell for the first week in four. The rally in Treasuries continued, sending 10-year yields further below 1.3%.
Oil slipped after OPEC+ agreed to boost production into 2022, resolving an internal dispute that had shaken the alliance. The yen advanced and the dollar was steady amid cautious sentiment.
A global rally in equities has paused amid a debate on whether price pressures will temper the economic rebound from the pandemic, in part by leading central banks to pare monetary policy support. Investors are also trying to make sense of the decline in Treasury yields. For some, the trend is a signal of cracks in the global recovery as the delta Covid-19 variant forces some nations to impose virus curbs, while for others the bond rally may have gone too far.
“The Covid backdrop is just one of several factors that may be adversely impacting the reflation trade,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said in a note. Others include the prospect of the Federal Reserve tapering stimulus and hiking sooner than expected, she wrote.
Data at the end of last week showed that while retail sales remain robust in the U.S., consumer sentiment unexpectedly declined as mounting concerns over rising prices led to a sharp deterioration in buying conditions for big-ticket items.
Elsewhere, the pound was generally steady with the U.K. government due to lift remaining virus curbs in England. At the same time, Prime Minister Boris Johnson agreed to self isolate after being exposed to Covid-19.
For more market commentary, follow the MLIV blog.
Here are some key events to watch this week:
Reserve Bank of Australia meeting minutes TuesdayEuropean Central Bank rate decision ThursdayBank Indonesia rate decision ThursdayU.S. existing home sales ThursdayThe Tokyo Summer Olympics begin Friday
Stocks
S&P 500 futures slipped 0.5% as of 11:10 a.m. in Tokyo. The S&P 500 fell 0.8% FridayNasdaq 100 futures fell 0.4%. The Nasdaq 100 lost 0.8%Japan’s Topix index fell 1.6%Australia’s S&P/ASX 200 index dropped 1%South Korea’s Kospi index slid 1.2%Hong Kong’s Hang Seng index lost 1.9%China’s Shanghai Composite index declined 0.8%Euro Stoxx 50 futures were down 0.8%
Currencies
The Japanese yen edged up 0.1% to 109.92 per dollarThe offshore yuan was at 6.4840 per dollarThe Bloomberg Dollar Spot Index edged up 0.1%The euro was little changed at $1.1803
Bonds
The yield on 10-year Treasuries fell one basis point to 1.28%Australia’s 10-year bond yield fell five basis points to 1.23%
Commodities
West Texas Intermediate crude dipped 1.5% to $70.76 a barrelGold was at $1,813.36 an ounce, up 0.1%
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