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Sydney - The dollar and US equity futures accelerated Friday’s declines and gold climbed with bonds as investors shunned risk assets amid increased skepticism of US President Donald Trump’s ability to implement his economic agenda.
The yen strengthened, while benchmark gauges from Japan to Singapore fell with S&P 500 Index futures on the heels of last week’s failed US health-care deal.
The dollar was on the verge of erasing the rally spurred by Trump’s election victory. Australian government bonds rose with Treasuries. Oil slipped, giving up earlier gains on a pledge by producers to consider extending their pact limiting supply. Iron ore futures erased 2017 gains.
“Investors will be a little more cautious as opposed to the rapid gains we witnessed from November,” said James Woods, a Sydney-based investment analyst at Rivkin Securities. “The defeat over Obamacare makes tax reform that much harder and the stakes are higher for markets.”
Reflation trades sparked by Trump’s election are faltering in March, with the dollar retreating and the S&P 500 Index headed for its worst month since October. Meanwhile, emerging-market assets have climbed, with the global equities gauge for developing nations on course for a third monthly gain in March.
Volatility is climbing, after a measure for the S&P 500 had its biggest weekly jump of the year and touched the highest level since December. Gauges of price swings from Hong Kong to India rose on Monday, with the volatility measure for the Nikkei 225 Stock Average climbing 11%.
“The test for markets comes tonight, as American investors face the first full session of trading,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “A significantly weaker US dollar suggests the news is not fully priced into shares.”
Here’s some key events to watch out for this week:
Chicago Fed President Charles Evans, who is a voter this year, speaks on economic conditions and monetary policy at an event in Madrid on Monday. Dallas Fed President Robert Kaplan, also a voter, is scheduled to speak on Monday at Texas A&M University. Germany will report results on Monday from the Ifo business survey for March.
Results from PetroChina are due on Thursday. China manufacturing data for March are due on Friday. The consensus forecast for the manufacturing index is 51.7, fractionally up from February and pointing to continued moderate expansion.
Here are the main moves in markets:
Stocks
Futures on the S&P 500 lost 0.7% as of 08:45. The underlying gauge last week tumbled 1.4%. The MSCI Asia Pacific Index fell 0.3%, with more than three shares falling for every one advancing. Raw-material shares led declines. Japan’s Topix lost 1.4%, poised for the lowest close since February 9.
Australia’s S&P/ASX 200 Index retreated 0.1% and South Korea’s Kospi declined 0.6%. Singapore’s Straits Times Index lost 0.4%. Hong Kong’s Hang Seng dropped 0.4% and the Shanghai Composite Index was little changed. The MSCI Emerging Markets index was little changed, with benchmark indices in Malaysia and Vietnam advancing while Indonesian and Indian gauges fell.
Currencies
The yen rose 0.9% to ¥110.36/$, bringing its monthly gain to 2.2% so far. The Bloomberg Dollar Spot Index fell 0.4%. It’s down more than 4% for the year. The euro gained 0.5% to $1.0847 and the British pound added 0.5%. The Australian dollar rose 0.1%.
Bonds
The yield on 10-year Australian government bonds slid four basis points to 2.71%. Yields on 10-year Treasuries dropped five basis points to 2.37%, after giving up one basis point on Friday.
Commodities
Gold rose 1.1% to $1 256.72, the highest since February. The metal is up 0.6% for March. Oil slipped 0.6% to $47.69 a barrel, erasing an earlier gain of as much as 0.7%.
Crude producers pledged to consider extending their pact limiting supply, as half a dozen nations said more time was needed to drain swollen stockpiles. Iron ore futures slid 6%, erasing gains for the year.
The commodity surged in the opening weeks of 2017 following a surprise rally last year amid optimism about the demand outlook in China. Copper fell 1.3% and tin dropped 1.3%.
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