Stocks Set to Dip on Concern About Slower Recovery: Markets Wrap

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(Bloomberg) — Asian stocks look set to dip Monday as the risk of a slower economic recovery from the pandemic amid elevated inflation saps sentiment.

Futures fell in Japan, Australia and Hong Kong. U.S. stocks last week chalked their biggest decline since mid-June on investor caution over the challenges for economic reopening highlighted by the delta virus strain.

Treasury yields have advanced as traders assess price pressures and their impact on the likely timeline for a reduction in Federal Reserve stimulus. An update on U.S. consumer prices this week will feed into the debate about whether elevated costs are transient. The dollar was steady in early trading.

In China, the spotlight is again on trade tensions with the U.S. after the Biden administration was said to be weighing a new probe into Chinese subsidies. Meanwhile, a raft of key Chinese data is set to show weakening growth.

The ongoing march of Covid-19 even as vaccine rollouts accelerate is undermining confidence in the economic recovery and contributing to supply-shock inflation. Key central banks are also getting closer to paring pandemic-era stimulus, posing risks for financial markets.

“Risk assets will continue to struggle in the near term with weak hard data due to the delta outbreak and supply disruptions over the summer,” Barclays Plc strategists including Shinichiro Kadota wrote in a note. But the Barclays team said they are wary of turning too bearish as progress toward containing the virus will likely bolster growth prospects.

Meanwhile, a key Democrat, Senator Joe Manchin, has cast doubt on the timeline for pushing President Joe Biden’s economic agenda through Congress. Elsewhere, North Korea said it successfully test-fired a “new type long-range” cruise missile.

Oil gained for a third week as investors focused on the ongoing production shut-ins after Hurricane Ida. Bitcoin was trading around $45,000.

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

The S&P 500 fell 0.8% FridayThe Nasdaq 100 fell 0.8%Nikkei 225 futures fell 0.5%Australia’s S&P/ASX 200 Index futures dropped 0.4%Hang Seng Index futures lost 0.7% earlier

Currencies

The Japanese yen rose 0.1% to 109.89 per dollarThe offshore yuan was at 6.4431 per dollarThe Bloomberg Dollar Spot Index rose 0.1% FridayThe euro was at $1.1814

Bonds

The yield on 10-year Treasuries advanced four basis points to 1.34%

Commodities

West Texas Intermediate crude rose 2.3% to $69.72 a barrelGold fell 0.4% to $1,787.58 an ounce

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