Stocks Dip, Yields Tick Up as Traders Assess Virus: Markets Wrap

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(Bloomberg) — A retreat in global stocks moderated Tuesday and U.S. futures climbed as investors assessed the threat posed to the economic recovery from the spread of the delta coronavirus variant. Treasuries trimmed gains.

Equities fell modestly in Japan and China — where banks kept the benchmark loan rate steady — and were little changed in Hong Kong. U.S. contracts advanced after the S&P 500 fell the most in two months on a reversal of the reopening trade as cyclicals like energy and financial shares slid.

Long-term Treasury rates ticked up, after spiraling Monday to their lowest since February and flattening the yield curve. Ten-year yields climbed back above 1.2%. The dollar and the yen pared recent advances.

Oil climbed after sinking on an OPEC+ deal to boost supply into 2022. Bitcoin traded just above the closely watched $30,000 level.

Traders are trying to gauge how long a bout of growth angst and volatility driven by outbreaks of the delta virus strain will last, after becoming accustomed to retail investors buying dips in stocks. Officials are grappling with rising infections from Sydney and Jakarta to London, with the U.S. telling its citizens to avoid traveling to the U.K. because of the latter’s case spike.

“The market might be a bit worried, though the worries might be overstated,” Marcella Chow, JPMorgan Asset Management global market strategist, said on Bloomberg Television. “We expect the economic recovery story to continue for the second half of the year and this should benefit the value rotation story once again.”

Geopolitical jitters also resurfaced on Monday after the U.S., the U.K. and their allies said the Chinese government has been the mastermind behind a series of malicious ransomware, data theft and cyber-espionage attacks against public and private entities — including the sprawling Microsoft Exchange hack earlier this year.

For more market commentary, follow the MLIV blog.

Some key events to watch this week:

Reserve Bank of Australia meeting minutes TuesdayEuropean Central Bank rate decision ThursdayBank Indonesia rate decision ThursdayU.S. existing home sales ThursdayThe Tokyo Summer Olympics begin Friday

Here are some of the main market moves:

Stocks

S&P 500 futures rose 0.5% as of 10:48 a.m. in Tokyo. The S&P 500 fell 1.6%.Nasdaq 100 futures gained 0.6%. The Nasdaq 100 fell 0.9%Japan’s Topix index fell 0.8%Australia’s S&P/ASX 200 index fell 0.3%South Korea’s Kospi index lost 0.3%Hong Kong’s Hang Seng index was steadyChina’s Shanghai Composite declined 0.5%

Currencies

The Japanese yen was at 109.51 per dollarThe offshore yuan was at 6.4897 per dollarThe Bloomberg Dollar Spot Index dipped less than 0.1%The euro was at $1.1794, down less than 0.1%

Bonds

The yield on 10-year Treasuries rose two basis points to 1.21%. They tumbled 10 basis points earlierAustralia’s 10-year government bond yield fell about six basis points to 1.18%

Commodities

West Texas Intermediate crude rose 0.7% to $66.91 a barrel. It tumbled 7.5% earlier.Gold was at $1,817.97 an ounce, up 0.3%

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