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GLOBAL MARKETS-Markets tap brakes on asset rise after getting ahead of recovery

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David Henry
·3 min read
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By David Henry

Feb 10 (Reuters) - Stocks were flat in early trading in Asiaon Thursday as investors kept tapping the brakes on runs inasset prices after taking in tepid U.S. inflation data andcomments from the Federal Reserve chief affirming the outlookfor a slow recovery.

The Australian S&P/ASX 200 Index was last up 0.02%while e-mini futures for the S&P 500 edged up 0.05%.

"Some of the steam has run out of the engine over the lastcouple of trading sessions," said Jarrod Kerr, chief economistat Kiwibank.

"We've had a good run, but the data hasn't kept up," saidKerr, predicting that bond yields and stocks will still end theyear higher after a pause in the reflation trade.

The pause coincides with much of Asia going into extendedholidays for the Lunar New Year.

On Wednesday, markets around the globe saw choppy tradingand mild moves in most asset prices, with the exception of U.S.Treasuries where yields tumbled after data showed inflationstayed benign in January, disappointing investors betting onincreasing price pressures.

The yield on benchmark 10-year Treasuries slid to 1.135%after rising to 1.176%. On Monday the yield had reached 1.2%, an11-month high.

The move was reinforced when Federal Reserve Chair JeromePowell, who has pledged to keep interest rates low, said theU.S. labor market still was "a long way" from full employment.

Wall Street stocks shrugged off Powell's comments. Majorindexes were little changed, though the Dow Jones IndustrialAverage snared a 0.2% gain to a record close of 31,437.80The S&P 500 slipped 0.03% and the Nasdaq Compositelost 0.25% from a record close the day before.

Within the indexes, there was further rotation of money fromsome big tech stocks toward energy shares, financial stocks,broadening the market leadership.

European shares also closed lower on Wednesday, withpan-European STOXX 600 index finished 0.2% in the red.

The dollar index drifted 0.2% lower after the tameU.S. inflation data, posting its third down day on lossesagainst sterling and euro. Cryptocurrencybitcoin was down more than 3% to $45,140.10 at 23:27GMT.

On Tuesday, bitcoin had hit $48,216 following Tesla'sdisclosure of a $1.5 billion investment in the virtual currency.

U.S. crude fell early on Thursday by 0.36% to $58.47per barrel and Brent was at $61.10, up 0.02%.

On Wednesday, oil rose for ninth day, its longest winningstreak in two years, supported by producer supply cuts and hopesvaccine rollouts will boost demand.

Some remained cautious about crude's rally. "The currentprice levels are healthier than the actual market and entirelyreliant on supply cuts, as demand still needs to recover," saidBjornar Tonhaugen of Rystad Energy.

Commodity traders will also watch platinum, which jumpedover 5% on Wednesday and raced to a six-year peak on the outlookfor demand from the automobile sector.

Platinum edged down 0.3% in early trading on Thursdayand was last at $1,239.8.

Spot gold was last up 0.1% to $1,843.23. U.S. goldfutures settled up 0.3% on Wednesday.

"Gold's in a bit of tug of war," said ED&F Man CapitalMarkets analyst Edward Meir. While the weaker dollar is bullish,expectations for a big U.S. stimulus package point toward higherinterest rates which may holding gold less attractive, he said.

(Reporting by David Henry in New York; Editing by DavidGregorio)