Asia Stocks, U.S. Futures Dip; Treasuries Steady: Markets Wrap

(Bloomberg) — Asian stocks opened lower after the reflation trade fizzled in the U.S. amid new travel curbs in some parts of the world. Treasuries and the dollar were steady after gains.

Japan underperformed, while Australia and South Korea had more modest declines. U.S. futures dipped after technology stocks led U.S. benchmarks to fresh records Monday as the likes of Apple Inc., Amazon.com Inc. and Zoom Video Communications Inc. climbed. But cruise operators and airlines sank as governments from Europe to Asia imposed new limits on travel from Britain — which is seeing a spike in coronavirus cases. The S&P 500 eked out a gain on news that Facebook Inc. won dismissal of two monopoly lawsuits.

The Treasury yield curve flattened amid month-end index rebalancing and the break in auctions until July 12, reducing supply. Oil held a drop with the market expecting OPEC+ producers to increase supply at an upcoming meeting. Bitcoin was steady around mid-$34,000.

With global stocks poised to close out their fifth quarterly advance amid a worldwide vaccine rollout, the debate over elevated valuations has returned. The S&P 500 is trading above the average of the past decade and demand for protection against losses in coming months has risen in the options market. The first half of the year has also been market by increasing concerns about prices pressures that has led central banks to debate pulling back stimulus measures.

Meanwhile, the U.S. is now the best place to be during the pandemic due to its fast and expansive vaccine rollout stemming what was once the world’s worst outbreak. Parts of the Asia-Pacific region that performed well in the ranking until now — like Singapore, Hong Kong and Australia — dropped as strict border curbs remain in place and a zero-tolerance approach to small virus flareups limit their ability to reopen.

“Covid has a big role to play internationally,” JoAnne Feeney, Advisors Capital Management partner and portfolio manager, said on Bloomberg Television. “The U.S. is the first out of the gate with high levels of vaccinations for a large country, we should see that continuing.” We are looking at a recovery “starting in the U.S. and then spreading around the world,” she said. “The reflation trade is taking a bit of a pause, but it doesn’t mean it’s over.”

Read: The Best And Worst Places to Be as The World Finally Reopens

For more market commentary, follow the MLIV blog.

Here are some events to watch in the markets this week:

OECD meets in Paris to finalize a proposal to overhaul global minimum corporate taxation WednesdayChina’s President Xi Jinping will deliver a speech as the nation marks the 100th anniversary of the founding of the Chinese Communist Party ThursdayOPEC+ ministerial meeting ThursdayECB President Christine Lagarde speaks FridayThe U.S. jobs report is due Friday

These are some of the main moves in markets:

Stocks

S&P 500 futures dipped 0.1% as of 9:14 a.m. in Tokyo. The S&P 500 rose 0.2%Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 1.3%Topix index fell 0.9%Australia’s S&P/ASX 200 Index fell 0.6%Kospi index dropped 0.2%Hang Seng Index futures rose 0.2%

Currencies

The yen traded at 110.61 per dollarThe offshore yuan was at 6.4610 per dollarThe Bloomberg Dollar Spot Index was little changed The euro traded at $1.1925

Bonds

The yield on 10-year Treasuries held at 1.48%Australia’s 10-year bond yield dropped six basis points to 1.52%

Commodities

West Texas Intermediate crude was little changed at $72.84 a barrelGold was little changed at $1,776.47

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