Asia stocks set to retreat; U.S. tech shares gain

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(Sept 1): Asian stocks looked set to pull back at the start of a new month after most U.S. stocks retreated even though technology shares extended gains.

Futures pointed to modest losses in Japan, Australia and Hong Kong. S&P 500 futures dipped. The S&P 500 Index edged lower, still notching a fifth consecutive monthly advance in August. The dollar weakened against its Group-of-10 peers, set for a fifth monthly decline in a row. Treasuries advanced, with 10-year yields slipping to just above 0.70%.

The Dow Jones Industrial Average led losses after its components were revamped, with Microsoft Corp. and Walmart Inc. slumping on concern China could block a possible sale of the video app TikTok. Apple Inc.’s surge as the stock split 4-for-1 lifted the Nasdaq 100 past 12,000 for the first time.

With global stocks up 6% in August and 10-year Treasury yields almost 20 basis points higher, traders have been betting on the global economy’s recovery from virus shutdowns and continuing gains in tech shares. Still, with U.S. infections ticking up again and India becoming the world’s epicenter for new cases, the pandemic is far from beaten and investors will be scouring data this week for clues on the outlook.

“The rally can continue, but it won’t be a smooth up tick higher,” Nela Richardson, senior investment strategist at Edward D Jones & Co., said on Bloomberg TV. “If you think about what’s driving this rally it’s really three crucial things: one is optimism about a vaccine; the second is lower for longer interest rates, and the third is a quicker than normal recovery in terms of earnings. This is where the markets might be a little optimistic.”

Elsewhere, oil opened higher. Silver gained, outperforming gold.

Here are some key events to watch this week:

    Reserve Bank of Australia hands down its policy decision Tuesday.
    ISM manufacturing data is due Tuesday in the U.S, Australia GDP is due Wednesday.
    U.S. jobless claims for the week ended Aug. 29 are due Thursday.
    U.S. jobs report Friday is forecast to show payrolls continued to rebound in August from virus lows.

Here are the main market moves:
Stocks

    S&P 500 futures ticked down 0.1% as of 7:09 a.m. in Tokyo. The S&P 500 Index fell 0.2%.
    Nikkei 225 futures fell 0.3% in Singapore
    Australia’s S&P/ASX 200 Index futures dropped 1%.
    Hong Kong’s Hang Seng Index futures fell 0.4%.

Currencies

    The yen traded at 105.89 per dollar after weakening 0.5%.
    The Bloomberg Dollar Spot Index fell less than 0.1%.
    The offshore yuan was at 6.8493 per dollar.
    The euro was at US$1.1940, after matching a two-year high.

Bonds

    The yield on 10-year Treasuries dipped more than one basis point to 0.70%.

Commodities

    West Texas Intermediate crude rose 0.7% to $42.89 a barrel.
    Gold was at US$1,968.41 an ounce.
    Silver strengthened 2.3% to US$28.14 per ounce.