Asia Stocks to Slip on U.S. Aid Block; Dollar Down: Markets Wrap

Asian stocks looked set to slip Wednesday after U.S. equities pulled back from record highs on fading prospects for bigger government aid checks to individuals. The dollar weakened.

Futures in Japan pointed lower and Australian stocks dipped at the open. S&P 500 Index futures edged up after the benchmark closed with a modest decline, while an index of U.S. small cap shares tumbled almost 2%. A gauge of global equities looked set for a record close after the U.S. House backed President Donald Trump’s proposal to boost aid checks for individuals, but pulled back from the day’s highs as Senate Republicans blocked an attempt by Democrats to increase the direct payments to $2,000 from $600. Benchmark Treasuries retreated and oil rose.

With a volatile year coming to a close, risk assets such as stocks, corporate bonds and Bitcoin are sitting just off record highs. As investors try to assess the impact of the pandemic and the pace of vaccine distribution, the MSCI AC World Index of global stocks is set to end the year about 14% higher, having surged almost 68% since its March low.

“This is an economy that is recovering, policy is going to be accommodative for years to come, it suggest a good backdrop for risk assets – it doesn’t mean there aren’t going to be some challenges as we progress over the next couple of years,” Brian Levitt, Invesco global market strategist, said on Bloomberg TV. “The reality is the markets are going to be focused on a recovery.”

On the coronavirus front, the U.S. government’s top infectious-disease doctor, Anthony Fauci, said the country’s vaccination rate is lagging and expressed concern about a post-holiday coronavirus surge. President-elect Joe Biden will address the slow rollout and outline his plan to pick up the pace in remarks on Tuesday, a transition official said.

In Europe, the Stoxx 600 rose as the FTSE 100 Index rallied in the first session since the U.K.’s Christmas Eve trade deal with the European Union. The pound recouped some of Monday’s decline.

Here are some key events coming up:

  • U.S. pending home sales and goods trade balance data are due Wednesday.
  • U.S. initial jobless claims figures are published Thursday.
  • Most global stock markets are closed Friday for New Year’s Day.

These are the main moves in markets:

Stocks

  • S&P 500 futures rose 0.1% as of 8:01 a.m. in Tokyo. The S&P 500 Index fell 0.2%.
  • Nikkei 225 futures slipped 0.1%.
  • Australia’s S&P/ASX 200 Index fell 0.1%.
  • Hong Kong’s Hang Seng Index futures rose 0.1% earlier.

Currencies

  • The yen was at 103.55 per dollar.
  • The offshore yuan traded at 6.5195 per dollar.
  • The Bloomberg Dollar Spot Index sank 0.4%.
  • The euro traded at $1.2255.
  • The British pound was at $1.3503.

Bonds

  • The yield on 10-year Treasuries rose one basis point to 0.93%.
  • Australia’s 10-year bond yield fell one basis point to 0.95%.

Commodities

  • West Texas Intermediate crude gained 0.8% to $48 a barrel.
  • Gold was steady at $1,878.39 an ounce.

— With assistance by Vildana Hajric

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