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Asia Stocks Set for Steady Start After US Record: Markets Wrap


(Bloomberg) — Most Asian stocks rose Wednesday after U.S. shares closed at a record on economic optimism and signs that vaccines can counter a highly infectious coronavirus strain. The dollar held an advance.

Australian equities outperformed, shrugging off lockdowns imposed to fight the delta variant of the virus, while Japan and Hong Kong fluctuated. U.S. contracts were higher after the S&P 500 eked out a gain, remaining on track for a fifth monthly advance — the longest run since August. Moderna Inc. reached an all-time peak after saying its vaccine produced protective antibodies against the delta strain, which has spread around the world since emerging in India.

The dollar has firmed on haven demand due to Covid-19 flareups, a climb that has hurt gold, which is set for the biggest monthly drop in over four years.

Treasury yields were steady as traders digested the latest Fed comments. On asset purchases, Thomas Barkin said he wants to see much more U.S. labor market progress before slowing them, while Christopher Waller said economic performance warrants thinking about pulling back on some stimulus.

Stocks are up about 90% from the worst of the market panic over the pandemic in March last year, helped by the rollout of vaccines and substantial liquidity injections. The rally has weathered concerns about the possibility of more troublesome virus strains, stretched valuations and the prospect of tighter monetary policy as the global recovery stokes commodity prices and inflation.

Big Take: Commodities Roar Back, Making Traders and Hedge Funds Billions

“The environment in Q3 should still be supportive for risky assets, though fear of bouts of persistent inflation could alter this scenario,” Sebastien Galy, senior macro strategist at Nordea Investment Funds SA, wrote in a note. “We expect to see bouts of volatility from this.”

Data overnight showed U.S. consumer confidence soared in June to a fresh pandemic high as Americans became more upbeat about the economy and job market. Home prices jumped the most in more than 30 years in April. In China, a gauge of the manufacturing industry was little changed in June, suggesting the economy’s recovery is stabilizing at a solid pace.

Fed officials will be focused on Friday’s employment report as the latest gauge of progress. Payrolls may have risen by 700,000 in June, according to the median estimate in a Bloomberg survey of economists. That would be the biggest increase since March.

“A stronger June employment report would help solidify expectations for a tapering announcement at one of the next few FOMC meetings,” Veronica Clark and Andrew Hollenhorst, economists at Citigroup Global Markets Inc., wrote in a note.

Oil climbed back above $73 a barrel. OPEC+ ministers are divided ahead of a key meeting later this week on production policy.

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 added 0.1% as of 1:53 p.m. in Tokyo. The S&P 500 was little changedNasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 0.3%Japan’s Topix index was little changed Australia’s S&P/ASX 200 Index gained 0.6%South Korea’s Kospi index rose 0.5%Hong Kong’s Hang Seng Index shed 0.2%China’s Shanghai Composite Index increased 0.2%Euro Stoxx 50 futures were little changed

Currencies

The yen was at 110.50 per dollarThe offshore yuan was at 6.4627 per dollarThe Bloomberg Dollar Spot Index was little changedThe euro was at $1.1900

Bonds

The yield on 10-year Treasuries edged up to 1.48%Australia’s 10-year bond yield was at 1.55%

Commodities

West Texas Intermediate crude rose 0.7% to $73.48 a barrelGold was at $1,758.88 an ounce, up 0.1%

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