By Wayne Cole
SYDNEY (Reuters) – Asian stocks were trying to avoid a fourth straight session of falls on Wednesday as US equity futures stabilized following a pullback by large-cap tech darlings.
Holidays in Japan, China and South Korea helped dampen markets, leaving the largest MSCI Asia-Pacific stock index outside of Japan up 0.1%.
Japan’s Nikkei was closed, but futures recovered early losses to stand at 28,850 from the last cash close of 28,812.
India’s Nifty 50 started 0.7% ahead of a speech by the country’s central bank governor, which could include policy changes to support the pandemic-stricken economy.
Futures on the Nasdaq edged up 0.3% after falling sharply overnight, while futures on the S&P 500 were also up 0.3%.
The Nasdaq fell 1.9% on Tuesday as some big names in tech embarked on profit taking, including Microsoft Corp, Alphabet Inc, Apple Inc and Amazon.com Inc. [.N]
Stretched valuations were tested when US Treasury Secretary Janet Yellen said rate hikes may be needed to stop the overheating economy.
She then woke up the comments, but it reminded investors that rates are expected to rise at some point in the future.
“Moderate inflation and a slowly moving Fed would continue to support, but inflation and a responsive Fed could prove negative for valuations,” said Tapas Strickland, director of economics at NAB.
“Either way, yields and stocks are likely to be in a dance, as much better-than-expected economic data continues to challenge central bank rate forecasts.”
One such challenge looms on Friday when US payroll data is expected to show a sharp increase of 978,000, while some estimates go as high as 2.1 million.
So far Federal Reserve Chairman Jerome Powell has argued that the job market is still far from where it should be to start talking about buying down assets.
Notable dove, Fed Bank Minneapolis chairman Neel Kashkari said on Tuesday that it might take a few years for the economy to return to full employment.
The Fed’s stubborn patience allowed US 10-year bond yields to return to 1.59%, from 1.69% last week, although the market struggled to fall below 1.53%.
The mere mention of the US rate hike was enough to help the dollar recover some of its recent losses.
The euro fell back to $ 1.2020 and threatened to break through significant chart support in the $ 1.1995 / 1.2000 area. A breakout would pave the way for a retracement target at $ 1.1923.
The dollar held at 109.27 yen, after avoiding resistance at 109.61. Against a basket of currencies, the dollar retreated slightly to 91.180, but remained somewhat above the recent two-month low of 90.422.
The New Zealand dollar climbed to $ 0.7173 when local employment data turned out to be stronger than expected.
In commodity markets, palladium hit an all-time high amid concerns over the shortage of metal used in automotive emission control devices. [GOL/]
Gold lagged behind at $ 1,783 an ounce.
Oil prices have hit seven week highs as more countries opened their borders to travelers, improving the outlook for gasoline and jet fuel demand. [O/R]
Brent added 54 cents to $ 69.42 per barrel, near its highest level since mid-March, while US crude rose 52 cents to $ 66.23 per barrel.
(Editing by Sam Holmes)