Asia stocks to drop after US retreat; dollar up

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(Sept 11): Asian stocks looked set to drop after a fresh selloff in megacap technology shares sent U.S. equities to their fourth loss in five days. Treasuries rose with the dollar.

Futures pointed lower in Japan and Australia, though were little changed in Hong Kong. S&P 500 contracts opened with small gains. In a topsy-turvy U.S. session, the Nasdaq lost more than 2% on continuing concerns that valuations got stretched too far in a five-month rally. Energy companies plunged as crude dropped back toward US$37 a barrel in New York. Treasuries reversed losses as the equity decline picked up speed. Gold turned lower, while copper tumbled.

Global stocks are heading for the first back-to-back weekly declines since March after a rally that added US$7 trillion alone to U.S. equity values. Signs are mounting that the pandemic continues to upend the global economy, with U.S. data showing cracks in recent labor-market strength, while Europe has re-emerged as a virus hot spot. Meanwhile, U.S. lawmakers remain far apart on a fresh relief bill.

“What happens when people take profits, is they sell what’s been working,” Anna Han, equity strategist at Wells Fargo Securities LLC, said on Bloomberg TV. “In the short-term with the election season coming, we’re a little concerned.”

In Europe, the pound continued to succumb to weakness amid renewed Brexit tensions. The euro jumped after the region’s central bank was said to agree that there’s no reason to overreact to the currency’s strength, though that advance disippated.

Here are some key events coming up:

  • U.S. CPI data is due Friday, with consumer prices expected to have risen in August.

These are the main moves in markets:

Stocks

  • S&P 500 futures added 0.2% as of 7:08 a.m. in Tokyo. The index fell 1.8% on Thursday.
  • Futures on Japan’s Nikkei 225 declined 0.6%.
  • Hang Seng futures earlier closed little changed.
  • Futures on Australia’s S&P/ASX 200 Index dropped 1.3%.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.3%.
  • The euro bought US$1.1823, up 0.1%.
  • The yen was at 106.14 per dollar.
  • The offshore yuan was little changed at 6.8442 per dollar.

Bonds

  • The yield on 10-year Treasuries fell two basis points to 0.68%.

Commodities

  • West Texas Intermediate crude dropped 0.2% to US$37.23 a barrel.
  • Gold was at US$1,946.67 an ounce.