Global Stock Market: Asian shares, U.S Equities edge lower

Asian shares look poised to follow U.S. equities lower Friday, with the rally in Treasuries gaining pace on growing anxiety that the spread of Covid-19 variants could hamper the global economic recovery.

Futures fell in Japan and Australia but edged up in Hong Kong, where a key gauge of Chinese stocks is near a bear market. U.S. contracts dipped after the S&P 500 and Nasdaq 100 retreated from records. Economically-sensitive sectors like industrials and materials led Wall Street lower.

U.S. government bonds extended their advance into an eighth trading day, with the five-year Treasury yield down more than 20 basis points from last month’s peak and the 30-year dipping below 1.90% for the first time since February.

Inflation expectations slid further and the dollar weakened. Traders in Asia will be focused on the release of more prices data from China this session.

Treasury benchmark yield headed for biggest weekly slide since June 2020

Central-bank stimulus programs are top of mind for markets amid concern that the economic rebound from the health crisis could be at risk of peaking. While the Federal Reserve mulls a reduction in its $120 billion of monthly bond purchases, the European Central Bank stands ready to extend ultra-loose policy.

In the culmination of an 18-month review published Thursday, ECB policy makers raised their inflation target to 2% and said they would tolerate moderate overshoots. In China, authorities have signaled they may soon unleash more support for the economy, an unexpected shift in tone that suggests the world’s fastest pandemic recovery may be weaker than it appears.

Elsewhere, oil rebounded after a U.S. government report showed rapidly declining inventories and record-high fuel demand in the midst of the peak summer travel season. Bitcoin slid amid a pull back in cryptocurrencies.

On the virus front, Pfizer Inc. plans to request U.S. emergency authorization in August for a third booster dose of its Covid-19 vaccine and said it’s confident it will be effective against the delta variant, which has spread around the world and forced more curbs on activity.

Some events to watch this week:

The Group of 20 finance ministers and central bankers meet in Venice on Friday
China PPI and CPI data released on Friday

Bloomberg/Hauwa Abu