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Sydney - The flight to haven assets eased following the biggest drop in the dollar since July with moves in the yen, Treasuries and gold steadying ahead of Donald Trump’s inauguration. Hong Kong shares rallied with emerging-markets assets.
Gold and the yen retreated for the first time in eight days. Chinese equities gained amid speculation of state efforts to ensure market stability during President Xi Jinping’s appearance at the World Economic Forum in Davos.
Hong Kong’s Hang Seng continued its run to the highest level since November. Tokyo shares erased losses and oil extended its climb toward $53 a barrel.
Politics have impacted heavily on global markets in 2017 with traders assessing the significance of Trump’s comments that the dollar is too strong ahead of his inauguration on Friday.
The US currency rose after Federal Reserve San Francisco President John Williams said the US economy has reached its maximum employment goal and gradual interest rate increases will likely be appropriate.
Meanwhile, trading firms are reaping the rewards from stronger currencies and bond-trading in the wake of the US election, with Morgan Stanley saying momentum from a strong fourth quarter continued into the first weeks of 2017.
“Trump has made a lot of announcements but people are waiting for that to translate into implementation and some policy around that,” Paul Harris, a Toronto-based fund manager at Avenue Investment Management, told Bloomberg TV. “This is the time when you might have some slight volatility.”
The Chicago Board Options Exchange Volatility Index rose 5.7% on Tuesday to the highest level of this year. A similar gauge for the Nikkei Stock Average slipped 2.6% on Wednesday after jumping 15% over the previous two days.
Here are the main moves in markets.
Stocks
The MSCI Asia Pacific Index added 0.3% as of 07:51. The Hang Seng rose 1.2% as property shares climbed. The Shanghai Composite advanced for a second day. Japan’s Topix climbed 0.3% after falling as much as 0.9% intraday.
The Jakarta Stock Exchange Composite Index halted a seven-day drop as BlackRock said Indonesia remains most favoured market due to its cyclical recovery. Futures on the S&P 500 rose 0.2%. The underlying gauge lost 0.3% on Tuesday.
Currencies
The Bloomberg Dollar Spot Index added 0.3% after retreating 1.3% on Tuesday to the lowest in a month. The yen slid 0.6% to ¥113.32/$, after soaring 3.9% over the previous seven days.
The Aussie fell 0.3% to 75.42 US cents. It’s had the best run among G-10 currencies since the start of the year, up 4.6%. The won climbed as much as 1% against the dollar, while the Malaysian ringgit advanced 0.4%. The pound retreated 0.6% to $1.2335 after surging 3% on Tuesday.
Commodities
Gold lost 0.4%, snapping a seven-day winning streak that was the longest since November. Iron ore futures slid 1.7%, also ending a seven-day stretch of gains.
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