Stocks Drop on Fresh Virus Concerns; Yields Steady: Markets Wrap

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(Bloomberg) — Asian stocks tumbled and U.S. futures declined Wednesday as rising virus cases around the world led to renewed concern about their economic impact. Treasuries held overnight gains.

An MSCI Inc. gauge of Asia-Pacific shares was on track for its biggest decline in four weeks with Japan and Hong Kong shares leading declines. Nasdaq 100 futures underperformed. S&P 500 contracts fell after the benchmark fell for a second day extending its slide from an all-time high, with investors showing caution ahead of the brunt of the earnings season. Treasuries held a rally that sent the 10-year yield to its lowest level in more than five weeks. The dollar stabilized and the yen climbed. Oil prices retreated.

After rising to record highs, stocks find themselves under pressure from a renewed surge in Covid-19 case around the world, raising the prospect of new lockdowns and hampering the economic recovery. Tokyo and Osaka will ask the Japanese government to declare a state of emergency. Glitches with vaccine rollouts are also raising concerns about the pace of reopenings.

“The data is very mixed: on the positive side we have great vaccine rollouts that are happening and then the negative is that we have J&J being halted,” Julie Biel, portfolio manager at Kayne Anderson Rudnick, said on Bloomberg TV. “Is that going to create more vaccine hesitancy? How much of that is going to impact longer term the ability to reopen?” The end of the pandemic “is going to be much more of a push-pull, it’s going to happen in increments,” she said.

The World Health Organization said coronavirus cases are rising in all regions except Europe, with the largest increase last week seen in Southeast Asia as India battles its biggest wave of infections.

Elsewhere, gold cemented an advance amid the risk-off move. Bitcoin fell for the fifth time in six days.

Read: Stumble in Stocks Lacks Easy Explanation for Wall Street Pundits

Here are some key events to watch this week:

EIA crude oil inventory report on Wednesday.European Central Bank rate decision and President Christine Lagarde briefing on Thursday.U.S. releases new home sales data Friday.

These are some of the main moves in markets:

Stocks

S&P 500 futures fell 0.3% as of 11.38 a.m. in Tokyo. The S&P 500 decreased 0.7%. The Nasdaq 100 dipped 0.7%Topix index fell 2.2%Australia’s S&P/ASX 200 Index dropped 1.5%Kospi index fell 1.6%Hang Seng Index lost 1.8%Shanghai Composite Index was down 0.2%Euro Stoxx 50 futures were little changed

Currencies

The yen traded at 107.94 per dollar, up 0.2%The offshore yuan was at 6.4991 per dollarThe Bloomberg Dollar Spot Index was little changedThe euro was little changed at $1.2031

Bonds

The yield on 10-year Treasuries held at 1.56%Australia’s 10-year bond yield fell four basis points to 1.74%

Commodities

West Texas Intermediate crude fell 0.8% to $62.16 a barrelGold was at $1,781.22 an ounce, up 0.1%

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