(Bloomberg) — Asian stocks are set to open cautiously on Tuesday with investors assessing the spread of omicron and an uncertain outlook for the new year. The S&P 500 Index closed at a record high on the first trading day of 2022 and Treasuries extended losses.
Markets trade for the first time this year in Japan, China and Australia, where equities edged higher at the open. U.S. futures wavered after the Nasdaq 100 outperformed. Tesla Inc. surged as the carmaker navigated supply-chain disruptions to report blowout deliveries for the fourth quarter. Apple Inc. gained, giving it a $3 trillion market value. The U.S. gains followed European stocks which hit unprecedented highs even as trading volumes remained light because of holidays.
Benchmark Treasury yields climbed across the curve. The 10-year note topped 1.60% in its worst start to a year since 2009 as investors braced for Federal Reserve interest-rate hikes in 2022. The dollar gained.
Hong Kong shares will be closely watched after their worst start to a year since 2019 amid weak sentiment for local tech shares and ongoing concerns about the financial health of Chinese developers. An index of companies with most of their business in China traded in the U.S. was steady Monday.
Markets are anticipating an uptick in volatility as investors navigate headwinds from the omicron variant, supply-chain disruptions and more hawkish central banks winding back pandemic stimulus that propelled a third year of double-digit returns for equities.
“We expect 2022 to be far more challenging from an investment perspective,” Heather Wald, vice president at Bel Air Investment Advisors, said in an emailed note. “Rarely has a market delivered three consecutive years of double-digit returns, as we have seen from 2019-2021. With the Federal Reserve set to accelerate tightening and a fairly valued stock market, we anticipate more muted returns for the S&P next year but still expect equities to remain attractive versus other liquid asset classes.”
Elsewhere, crude oil in New York held gains to trade near $76 a barrel following news Libya’s crude output is expected to fall to the lowest in more than a year and ahead of an OPEC+ meeting on Tuesday to discuss production. Gold fell and Bitcoin hovered around $46,000.
What to watch this week:
- FOMC meeting minutes scheduled for release Wednesday
- Fed’s Bullard discusses the U.S. economy and monetary policy in an event on Thursday
- Fed’s Daly discusses monetary policy on a panel Friday
- ECB’s Schnabel speaks on a panel Saturday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 8:07 a.m. in Tokyo. The S&P 500 rose 0.6%
- Nasdaq 100 futures gained 0.1%. The Nasdaq 100 rose 1.1%
- Australia’s S&P/ASX 200 Index advanced 0.4%
- Hang Seng Index futures rose 0.4% earlier
Currencies
- The Japanese yen was at 115.35 per dollar
- The offshore yuan was at 6.3751 per dollar
- The Bloomberg Dollar Spot Index rose 0.5%
- The euro traded at $1.1295
Bonds
- The yield on 10-year Treasuries advanced 12 basis points to 1.63%
- Australia’s 10-year bond yield increased 13 basis points to 1.80%
Commodities
- West Texas Intermediate crude was at $75.95 a barrel
- Gold was at $1,801.38 an ounce
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