The ASX 200 is looking at a soft opening later today after Wall Street ended last week without providing a major lead for the start of this week.
The ASX futures market ended with a small loss of 15 points for the resumption of trading later today.
That was after the index lost 0.6% on Friday to be down 0.9% for the week.
The Dow fell 0.71% to end at 32,627.97 points, while the S&P 500 eased 0.06% to 3,913.1. The Nasdaq climbed 0.76% to 13,215.24.
For the week, the S&P 500 and Nasdaq fell 0.8%, while the Dow lost 0.5%.
The S&P 500 is up more than 4% this year, with President Biden’s newly passed $US1.9 trillion coronavirus relief plan providing the latest fuel for the economy and the stock market.
The Dow is up around 6.5% year to date but the Nasdaq is only ahead by 2.45% at Friday’s close.
By way of comparison, the ASX 200 has managed to rise by less than 2% so far in 2021 (up 1.84%).
The pace of the economic recovery and COVID-19 vaccinations will remain in market focus this week, along with the rise in bond yields that has pressured tech and growth shares and further supported bank and other value stocks.
The Nasdaq is still about 6% below its February 12 all-time closing high as technology and high-growth stocks have lost favor in recent months, with their valuations looking less attractive as Treasury yields rise.
The yield on 10-year notes US bond, which has risen sharply in the past seven weeks on growth expectations, ended around 1.726%, down from a peak of 1.7557% on Friday.
The yield fell to a day’s low of 1.67% in the morning as traders rethought the big rise on Thursday but then jumped to the 14 month peak above 1.75% and then eased.
But equities remain popular. Bank of America said on Friday that investors put a record $US68.3 billion into equity funds in the week to March 17.
That took the inflow so far in 2021 to $US347 billion – matching record inflows seen for 2017 as a whole. On an annualised basis, this year’s inflows are a “breathtaking” $1.6 trillion, according to Bank of America on Friday.
US equity funds attracted $US53 billion last week, despite the bond worries and the selloff in megatechs.
Friday also saw the Fed re-tighten its controls over the balance sheets of America’s biggest banks.
The Fed hit banking stocks when it announced it was ending temporary bank leverage rule exemption that was due to expire at the end of the month.
The rule excluded US Treasuries and central bank deposits from the “supplementary leverage ratio,” which helped to encourage bank lending during the pandemic.
The banks had wanted the Fed to continue the exemption but some analysts pointed out that this was due to the weaker rule allowed the banks to borrow cheaply and leverage up their balance sheets and make bigger trading profits.
In response, yields continued to rise, and the stock market sold off and bank shares fell. Shares in Citi, Goldman Sachs and Bank of America all fell 1% by the close on Friday on the news.
