SYDNEY (Reuters) – Asian stocks faltered Monday over concerns that problems with the introduction of vaccines coupled with new variants of COVID-19 will slow a global economic recovery already ingrained in the market’s rich valuations.
MSCI’s widest index of Asia-Pacific stocks outside Japan fell 0.4% after four consecutive loss periods. Japan’s Nikkei bounced 0.4% after losing nearly 2% on Friday.
Futures for the S&P 500 lost an additional 0.7% in heavy trading, while NASDAQ futures fell 0.9%.
Dealers also waited anxiously for new developments in the great battle between private investors and funds specializing in short positions.
According to an analysis by Goldman Sachs Inc. US hedge funds bought and sold most stocks in more than 10 years amid wild swings in GameStop Corp.
On Monday, silver was said to be the new target for retail as the metal rose 5.7% to a six-month high.
Still, many analysts see this entertaining episode as an afterthought compared to signs of a loss of momentum in the United States and Europe as the coronavirus blockages bite.
Indeed, a study from China on Sunday showed that factory activity grew the slowest in five months in January, as restrictions took their toll in some regions.
Nor has the news of vaccine rollouts been positive, especially given doubts as to whether they will work on new COVID strains.
“It is these considerations, not what happens to a video game seller on a daily basis, that weighed on risky assets,” said John Briggs, global head of strategy at NatWest Markets. “So many of the market valuations, especially risk, are based on the fact that we can see a light at the end of the COVID tunnel.”
Doubts have also been raised about the future of President Joe Biden’s $ 1.9 trillion aid package, with 10 Republican senators pushing for a $ 600 billion plan.
The jitters in the stocks only caused a short wave of bonds, with government bond yields actually rising late last week, perhaps reflecting the tidal wave of loans that is underway.
A record $ 1.11 trillion in gross Treasury bills is planned for this quarter, compared to $ 685 billion in the same time last year.
Beginning Monday, US 10-year yields held at 1.07% and near the recent 10-month high of 1.187%.
Higher interest rates coupled with more cautious market sentiment have kept the safe-haven dollar stable above its recent lows. The dollar index stood at 90.628, from a low of 89.206 in early January.
The euro remained at $ 1.2121, well from its recent peak of $ 1.2349, while the dollar remained stable at 104.74 yen.
Gold followed silver higher to $ 1,853 an ounce, but repeatedly bogged down at resistance around $ 1,875. [GOL/]
Concerns about global demand kept oil prices in check. US crude oil fell 30 cents to $ 51.90 a barrel, while Brent crude oil futures fell 20 cents to $ 54.84. [O/R]
Editing by Shri Navaratnam