Asian shares wobbled on Monday amid sharp losses in gold and oil prices, while the dollar held near four-month highs after an upbeat U.S. jobs report lifted bond yields.
Sentiment was shaken by a sudden dive in gold as a break of $1,750 triggered stop-loss sales taking it as low as $1,684 an ounce. It was last down 2.2 percent at $1,723.
Brent sank almost 2 percent on concerns the spread of the Delta variant would temper travel demand.
Holidays in Tokyo and Singapore made for thin trading conditions, leaving MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) down 0.1 percent.
Japan’s Nikkei (.N225) was shut but futures were trading just below Friday’s close. Nasdaq futures slipped 0.5 percent and S&P 500 futures 0.3 percent.
Chinese trade data out over the weekend undershot forecasts, though figures due later Monday should show inflation is no barrier to more policy stimulus.
The U.S. Senate was closer to passing a $1 trillion infrastructure package, though a single Republican lawmaker was holding up a vote on Sunday.
Investors were still assessing whether Friday’s strong U.S. payrolls report would take the Federal Reserve a step nearer to winding back its stimulus.
“There is not a lot of disagreement on a taper announcement coming sometime between September-December followed by actual tapering sometime between November and January,” said Rodrigo Catril, a senior FX strategist at NAB.
However, the pace of tapering was still up in the air and would decide when an actual rate hike came, he said. The Fed is currently buying $120 billion of assets a month, so a $20 billion taper would end the program in six months whilst a $10 billion tapering approach would take a year.
The spread of the Delta variant could argue for a longer taper with U.S. cases back to levels seen in last winter’s surge with more than 66,000 people hospitalized.
Figures for July CPI due this week are also expected to confirm inflation has peaked, with prices for second-hand vehicles finally easing back after huge gains.
Four Fed officials are speaking this week and will no doubt offer their own take on tapering.
In the meantime, stocks have been mostly underpinned by a robust U.S. earnings season. BofA analysts noted S&P 500 companies were tracking a 15 percent beat on second-quarter earnings with 90 percent having reported.
“However, companies with earnings beats have seen muted reactions on their stock price the day following earnings releases, and misses have been penalized,” they wrote in a note.
“Guidance is stronger than average but consensus estimates for two-year growth suggest a slowdown amid macro concerns.”
Financials are firmed on Friday as a steeper yield curve benefits bank earnings while penalizing the tech sector with sky-high valuations.
Yields on U.S. 10-year notes were up at 1.30 percent in the wake of the jobs report, having hit their lowest since February last week at 1.177 percent.
That jump gave the dollar a broad lift and knocked the euro back to $1.1744, its lowest since April. The dollar likewise climbed to 110.28 yen and away from last week’s trough of 108.71.
That took the U.S. currency index up to 92.882 and nearer to the July peak of 93.194.
Oil prices eased further after suffering their largest weekly drop in four months amid worries that coronavirus travel restrictions would threaten high expectations for demand.
Brent fell $1.30 to $69.40 a barrel, while U.S. crude lost $1.29 to $66.99.