Publications
Partners
Sydney - Asian stocks advanced and futures pointed to higher starts to UK and US equity trading as Treasuries steadied following a recent rally.
Concerns about the US administration’s ability to enact fiscal stimulus after a crucial health-care bill was scuppered, as well as weak inflation data, left investors questioning the strength of the global economy, sending Treasuries, bunds and gilts higher.
The dollar held at the lowest level in almost a year.
With global equities at record highs, investors are assessing whether earnings results will be strong enough to warrant lofty prices and if economies are in a position to handle higher interest rates.
The next clues come from meetings of central banks in Japan and Europe this week and profits due on Wednesday at companies including Morgan Stanley and Qualcomm.
The market-implied probability of a hike from the Federal Reserve by year-end has declined in the past two weeks with Treasury yields. The odds are now about 40%, down from 60% on July 7, based on the current effective fed funds rate and the forward overnight index swap rate.
Part of that is due to signs that US President Donald Trump’s health-care reform bill is effectively dead in its current form, after two more Republican senators announced their opposition to the plan.
Here are some key upcoming events:
The ECB meets on Thursday. Bloomberg Intelligence expects no change then and no rate increase before 2019. Reuters cited unidentified officials as saying the bank is keen to keep asset purchases open-ended.
The Bank of Japan is forecast to stand pat at its meeting on Thursday.
Here are the main moves in markets:
Bonds and currencies
The yield on 10-year Australian government bonds slid three basis points to 2.72%. The yield on 10-year US Treasuries is up one basis point to 2.27%, though down seven basis points this week after dropping five basis points last week.
The Bloomberg Dollar Spot Index hovered on Tuesday near its weakest level since August.
The euro was at $1.1535 after rising 0.7% amid speculation the ECB could signal its intent to scale back monetary stimulus at its meeting on Thursday. The Australian dollar traded at 79.27 US cents after surging 1.5%.
The Mexican peso erased earlier losses after S&P Global Ratings revised the Latin American nation’s outlook to stable from negative. The currency was up 0.1% at 17.4537 to the dollar.
Stocks
Japan’s Topix index swung between gains and losses, while South Korea’s Kospi index was little changed. Hong Kong’s Hang Seng Index gained 0.5% and the Shanghai Composite Index was up 1%.
Australia’s S&P/ASX 200 Index rose 0.8% as bank shares climbed. Analysts said new capital requirements looked fairly benign. More on that story here.
Futures on the S&P 500 Index added 0.1% after the underlying gauge rose 0.1% to a record 2 460.61 on Tuesday, reversing a loss of 0.4% earlier in the session.
The Nasdaq Composite Index gained for a eighth day to reach an all-time high.
Commodities
WTI crude slipped 0.3% to $46.28 a barrel. Gold was down 0.2% to $1 241.23 an ounce.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: Fin24’s top stories
