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Stock rally fizzles in Asia; dollar heads higher: markets Wrap

Aug 30 2018 08:00
Adam Haigh and Andreea Papuc, Bloomberg

Asian stock gains evaporated, despite another fresh record from their US counterparts, as trade and geopolitical issues continued to simmer. The dollar ticked higher and Treasury yields were little changed.

Japan’s equity indexes erased earlier gains and stocks fell in Hong Kong and China, while they were little changed in South Korea and Australia. Earlier, the S&P 500 Index rose a fourth day to close above 2 900 for the first time after a better-than-expected reading on the US economy and a rally in tech shares buoyed sentiment.

The Australian dollar plunged after second-quarter business investment was much worse than expectations, while the New Zealand dollar slumped as business confidence hit a 10-year low.

Equities have rallied as August draws to a close, with Asia-Pacific stocks recouping much of the losses seen earlier this month. Central bank support in China has gone some way to stabilizing the currency and stemming a rout in Shanghai stocks, though worries remain concerning the US-China trade spat and the pace of monetary tightening in the US.

The Korean Peninsula is back in the headlines, with US President Donald Trump accusing China of undermining US efforts to pressure North Korea into giving up its nuclear weapons, indicating his trade war with Beijing is starting to exacerbate geopolitical tensions.

Elsewhere, crude oil added to gains following a bigger-than-expected decline in US crude stockpiles. Argentina’s peso tumbled to a record low after President Mauricio Macri asked the International Monetary Fund to speed up disbursements from its $50bn credit line to ease the nation’s financial crisis.

Here are some key events scheduled for the remainder of this week:

China’s official factory PMI are due on Friday. The Bank of Korea sets policy on Friday. Weak jobs growth has cooled speculation of an interest-rate increase.

These are the main moves in markets:

Stocks

Japan’s Topix index was little changed as of 14:27 in Tokyo. Australia’s S&P/ASX 200 Index rose 0.1%. South Korea’s Kospi index was flat. Hong Kong’s Hang Seng Index fell 0.8%. S&P 500 futures lost 0.1%. The S&P 500 climbed 0.6%.

Currencies

The yen traded at 111.66/$. The offshore yuan lost 0.3% to 6.8419/$. The Bloomberg Dollar Spot Index rose 0.1%. The euro bought $1.1692. The Aussie lost 0.4% to 72.79/$, while the kiwi slid 0.9% to 66.53/$.

Bonds

The yield on 10-year Treasuries held at 2.88%. Australia’s 10-year bond yield climbed one basis point to 2.56%.

Commodities

West Texas Intermediate crude was little changed at $69.64 a barrel, the highest in seven weeks, after jumping 1.4%. Gold fell 0.3% to $1 203.05 an ounce.

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