Publications
Partners
Tokyo - Asian stocks pared earlier losses despite continuing reverberations in the foreign exchange market after rhetoric from Trump administration officials on trade and the dollar. The US currency extended its decline to a three-year low.
Gains in stocks in Korea and Shanghai helped the MSCI Asia Pacific stem a decline even as shares in Tokyo and Hong Kong dropped. Futures on the S&P 500 Index were little changed after it closed flat yesterday after swinging between gains and losses.
The yen strengthened past ¥109/$ and the euro climbed to the highest since late 2014. Ten-year US Treasury yields held near the highest in three and a half years. West Texas Intermediate oil extended its climb above $66 a barrel after US crude stockpiles declined for a record 10th week.
Treasury Secretary Steven Mnuchin’s endorsement of a weaker dollar as a help to trade added to pressure on a greenback that’s been in decline for much of the past year, although White House Press Secretary Sarah Sanders appeared to soften his comments later.
Eyes now turn to the European Central Bank’s policy meeting on Thursday, where traders will be looking for for further clues on its appetite for rolling back stimulus, and its officials’ thoughts on a strengthening currency.
Investor focus on global trade has intensified after the US officials’ comments added to President Donald Trump’s protectionist push days after his administration slapped tariffs on solar panels and washing machines.
Commerce Secretary Wilbur Ross’s suggestion at Davos that the US could enact more levies touched off concerns of a trade war that could hamper the synchronized global growth that’s sent equities around the world to all-time highs.
“To the extent that trade is disrupted, it’s probably not good for economies, for US companies and corporations, and would probably put pressure on the rising stock market,” Michael Cuggino, president and portfolio manager at the Permanent Portfolio Family of Funds in San Francisco, said by phone.
“I don’t think it’s a surprise that you have negative news that might be impacting the continuing march-up as people take a pause.”
Elsewhere, the Brazilian real strengthened the most in eight months and the Ibovespa stock exchange rose to a record after a panel of judges upheld the conviction of former President Luiz Inacio Lula da Silva on graft, a ruling that would prevent him from running in the general election.
Here’s what to watch out for this week:
• Earnings season is in full swing: Intel, LVMH Moet Hennessy Louis Vuitton, Starbucks and Hyundai all come this week.
• Barring any last minute changes in Washington, Trump will join world leaders and senior executives in Davos for the annual World Economic Forum.
• The European Central Bank announces its rate decision on Thursday.
• The UK House of Lords is considering Prime Minister Theresa May’s Brexit bill this week.
These are the main moves in markets:
Stocks
• The MSCI Asia Pacific Index dropped 0.1% as of 3:13 pm Tokyo time.
• Japan’s Topix index decreased 0.9%.
• Hong Kong’s Hang Seng Index dipped 0.2%.
• Kospi index rose 1%.
• Australia’s S&P/ASX 200 Index slid 0.1%.
• Futures on the S&P 500 Index retreated 0.1%.
Currencies
• The Bloomberg Dollar Spot Index fell 0.3%.
• The Japanese yen rose 0.3% to ¥108.85/$.
• The euro rose 0.3% to $1.2446.
Bonds
• The yield on 10-year Treasuries fell one basis point to 2.64%.
• Japan’s 10-year yield rose less than one basis point to 0.086%.
Commodities
• West Texas Intermediate crude rose 1% to $66.24 a barrel.
• Gold rose 0.4% to $1 364.50 an ounce.
• LME copper rose 0.5% to $7 184.00 per metric ton.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
