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Stocks, currencies mixed ahead of Fed, oil slumps

Jun 14 2017 09:15
Garfield Reynolds, Bloomberg

Sydney - Asian equities were mixed, with solid gains in Australia and New Zealand offset by China, where markets weakened despite data showing resilience in retail sales and industrial output.

The dollar held declines and Treasuries edged higher ahead of the Federal Reserve’s policy decision.

South Korea’s benchmark gave up earlier gains that came on the back of US stocks climbing to all-time highs as technology stocks rebounded. Economic data from China were largely in line with forecasts, but stocks slipped on concerns regulators will place further curbs on insurers’ investments.

The yen was little changed, while sterling fell after rising for the first time since the UK election. Oil also resumed its decline as industry data showed US crude stockpiles expanded, exacerbating an inventory overhang.

A rebound in tech shares on Tuesday in Asia carried through to US trading, restoring what had been a key driver for global equity gains. Drama in Washington continued to demand attention, with US Attorney General Jeff Sessions testifying to lawmakers that he never spoke with Russian officials concerning “any type of interference” with the 2016 presidential campaign.

He declined to comment on conversations he had with President Donald Trump, saying that to do so would potentially deny the president the right to claim executive privilege.

Here are the key events investors will be watching this week:

Fed policy makers are expected to raise their benchmark interest rate for the second time this year on Wednesday. Since that’s widely anticipated, the more market-sensitive elements of the meeting will relate to signals on future policy - either the path for rates or plans to cut the $4.5trn balance sheet.

Central banks in Japan, Switzerland and Britain are also scheduled to weigh in with policy decisions this week. China retail sales rose 10.7% year-on-year in May, in line with forecasts, while industrial production was up 6.5% versus an expected 6.4%.

Japanese industrial production rose 5.7% in April from a year earlier and 4% month-on-month, matching estimates. Westpac’s Australian consumer confidence index fell 1.8% to 96.2 for June.

A report on the Australia jobs market is due on Thursday.  South Korea reported unemployment dropped to 3.6% in May, below the most optimistic forecast, from 4% in April. New Zealand’s current-account deficit widened to 3.1% of the economy.

Here are the main moves in markets:

Stocks

The Topix Index was up 0.1%t at 06:37, heading for its highest close in a week. The Shanghai Composite Index was down 0.6%, while the CSI 300 Index dropped 1%, its biggest intraday loss in three weeks. The Hang Seng Index fell 0.3% and the Kospi Index in South Korea was off 0.2%.

The MSCI Asia Pacific ex-Japan lost 0.1%. Australian equities advanced for a fourth day, climbing 0.8%. The S&P ASX 200 Index is at its highest in nearly a month. New Zealand shares rose 0.1%. Futures for the S&P 500, which added 0.5% on Tuesday, were down 0.1%. The Nasdaq 100 climbed 0.8% on Tuesday, rebounding from its worst two-day drop of the year. 

Currencies

The pound was down 0.1% at $1.2746 after it strengthened 0.8% on Tuesday, spurred by data showing UK inflation resumed its upward march last month.

The Canadian dollar was the biggest mover, rising for a fifth day. It was up 0.2%. The Bloomberg Dollar Spot Index held Tuesday’s 0.2% retreat. The yen was unchanged at 110.06 per dollar. The Aussie dollar gained 0.1% to 0.7544 US cents. South Korea’s won, Asia’s strongest currency this year, gained 0.2% to 1.126.35 per dollar.

Bonds

The yield on 10-year Treasuries was down one basis point at 2.20%. Australian 10-year notes were steady, with the yield at 2.40%.

Commodities

West Texas crude futures slumped 1% to $46 a barrel. US inventories climbed by 2.75 million barrels last week, the American Petroleum Institute was said to report. Iron-ore futures in Dalian reversed earlier losses to climb 1.6% to 425 yuan a ton following the stable Chinese economic data.

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equities  |  markets  |  global markets

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