Europe stocks drop before Trump speech, lira slips

Tokyo - European equities declined before president-elect Donald Trump’s first press conference since July. Surging raw-materials stocks sent Asian stocks higher. Turkey’s lira hit a new low ahead of the latest data on its current-account deficit.

The Stoxx Euro 600 Index retreated as investors awaited Trump’s first news briefing for details on his policy outlook. Raw-materials shares in Asia rose toward a one-month high on Tuesday’s Chinese producer-prices data. While oil rose, it stayed near a one-month low on signs the US is raising its supply.

Sterling weakened before the Bank of England Governor Mark Carney’s testimony and the yen snapped a two-day climb.

Financial markets are cautious as the euphoria over Trump’s perceived pro-growth policies fades as he prepares to face the media.

Chinese data showing producer prices increased at the fastest clip in five years helped Asian metals and mining shares extend advances as it signalled the world’s second-largest economy is set to export inflation around the world via its supply chains.

"We don’t know how the market will react to Mr. Trump’s press conference at the moment, so we’re in a wait-and-see situation," said Naoki Fujiwara, chief fund manager at Shinkin Asset Management in Tokyo.

"In the mid- to long term, for commodities including precious metals there’ll be investment from Chinese domestic demand. I expect China to maintain stability in its economy."

Stocks

The Stoxx Europe 600 Index lost 0.2% at 8:43 London time, while the FTSE 100 fell 0.1%. The dollar-denominated MSCI Asia Pacific Index climbed 0.4%, with raw-material stocks up 1.9% and Japan’s Topix index rallying 0.5%.   

Miners and technology shares led Australia’s S&P/ASX 200 Index up 0.2% and equities in New Zealand climbed for a third day.

The Shanghai Composite Index slid 0.8%. Hong Kong’s Hang Seng Composite Index rose 0.8% in a 10th day of gain, the longest winning run since 2012. The Hang Seng China Enterprises Index added 0.7%.  

South Korea’s Kospi index gained 1.5% after Samsung Electronic rallied 2.8% to a record. India’s S&P BSE Sensex jumped to a two-month high, led by metal producers.

Tata Steel was the top gainer on the gauge, rallying to more than a two-year high. E-mini futures on the S&P 500 were down 0.1%.

The S&P 500 closed unchanged at 2 268.90 on Tuesday. The Dow Jones Industrial Average fell 0.2% to 19 855.53.  

Commodities

West Texas Intermediate crude gained 0.3% to $50.98 a barrel after sliding almost 6% over the past two days.

Analysts project US oil stockpiles rose by 1.5 million barrels last week, muting optimism fuelled by producers including Russia and Iraq saying they’re implementing last year’s accord to cut output. Iron ore futures jumped 3% after a 5.5% rally on Tuesday.

Copper was little changed following a 3% surge. Gold for immediate delivery rose 0.2% at $1 190.61 an ounce, near the highest level since November.

Currencies

The Bloomberg dollar Spot Index, a gauge of the greenback against 10 major peers, was little changed. The yen weakened 0.1% to 115.90 per dollar following a two-day advance of more than 1%.

Turkey’s lira lumped 1.5%, retreating for a fifth day as investors awaited signs the central bank will support the currency.

Bonds

Yields on Australian government bonds due in a decade rose by two basis points, or 0.02 percentage point, to 2.735% after shedding five basis points last session.

Similar maturity Treasuries were little changed at 2.38%.