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Sydney - Gold and Treasuries strengthened with the Japanese yen on lingering investor caution about global security risks and the path of US interest rates. Crude ended this year’s best run.
The haven assets advanced as the White House press secretary issued a warning to Syria and tensions over North Korea rumbled on.
US bond yields fell after Federal Reserve chair Janet Yellen confirmed the central bank has shifted gears from post-crisis healing to sustaining economic gains. Oil dropped after five days of gains even as EIA data due on Wednesday was expected to show U.S. stockpiles retreated from a record.
Policy makers want to dial back the level of support the Fed is providing the US this year as America closes in on its goals of full employment and 2% inflation.
Traders are not only having to cope with monetary tightening in the world’s biggest economy and the prospect of an unwinding central bank balance sheet, they’re also weighing President Donald Trump’s unpredictable foreign policy.
“Flight to safety drives the global markets, as geopolitical concerns occupy the global headlines with North Korea’s missile tests and growing threat against the US, the US’s strike on Syria and Jean-Luc Mélenchon gaining support in the French election,” Ipek Ozkardeskaya, a market analyst at London Capital, wrote in a note.
What investors are watching:
US Secretary of State Rex Tillerson will visit Moscow this week in an effort to persuade Russia that its alliance with Assad is no longer in its strategic interest. Federal Reserve Bank of Minneapolis President Neel Kashkari will participate in a Q&A at a meeting of the Minnesota Business Partnership.
US bank earnings also begin with Citigroup, JPMorgan and Wells Fargo early on Thursday. The G-7 foreign ministers hold a news conference after a two-day meeting in Lucca, Italy. UK data on Wednesday is likely to show employment has remained steady while wage growth slowed.
Here are the main moves in markets:
Asia
Chinese equities traded in Hong Kong fell to a one-month low while Japan’s Topix slipped as the yen gained. Shares in Seoul extended the longest losing streak since June as tensions over both Syria and North Korea remain in focus.
Currencies
The yen gained 0.2% to ¥110.67/$ at 10:53, strengthening for a second day. The Bloomberg Dollar Spot Index edged lower by 0.1%, while the euro pared losses to trade little changed. The British pound added less than 0.1% to $1.2422; data showed UK inflation’s upward trajectory paused in March.
Stocks
The MSCI All-Country World Index was little changed. Volumes in markets are down in a week that’s shortened in many countries by Easter holidays. The Stoxx Europe 600 Index dropped less than 0.1%, after a four-day rally to the highest since December 2015.
Futures on the S&P 500 Index declined 0.1%. The benchmark gauge climbed less than 0.1% on Monday, while the CBOE Volatility Index, or VIX, rose to the highest level this year.
Bonds
Treasuries climbed, with the yield on the 10-year note dropping two basis points to 2.35% after a two-point decline on Monday.
Commodities
West Texas Intermediate oil fell 0.3% to $52.91 after jumping 1.6% on Monday. Gold rose for a third day, adding 0.2% to $1 257.03 an ounce. Iron ore futures climbed as much as 1.4% in China after dropping 7.1% in the previous two sessions, but pared most gains.
Zinc extended its decline, dropping 1.3% amid signs that output is increasing. The London Metal Exchange index of six metals contracts closed Monday at the lowest in a month.
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