Stocks drop in Asia on trade, S&P 500 futures rise

Sydney - The sell-off that sent global markets into a tailspin last week stretched into Asia on Monday as investors continue to assess the impact that American protectionist policies will have on global growth.

US equity futures offered some hope of stabilisation.

The steepest decline was in Shanghai with investors awaiting further developments on the US-China tariffs. While stocks also declined in Tokyo, Hong Kong and Sydney, they were off the sessions’ lows.

Shares rose in Seoul. Global stocks put in their worst week since the rout in early February and erased all of the subsequent recovery, with losses deepening into the close of Friday trading in the US Futures on the S&P 500 Index and the Nasdaq advanced.

The yen slipped back from the strongest in more than 16 months against the dollar. The dollar fell against all major peers except the yen.

"There’s a lot of uncertainty right now," Oliver Pursche, chief market strategist at Bruderman Asset Management, told Bloomberg TV. "Over the next week or two, investors should be prepared for more volatility but should also be looking out for some great companies that are going to be available to buy at very, very good prices."

Treasury Secretary Steven Mnuchin told Fox News that he’s "cautiously hopeful" the top two economic powers will reach a deal to avoid the tariffs US President Donald Trump ordered on at least $50bn of Chinese imports.

Part of the problem for investors is assessing how the tariffs will be implemented, particularly after Trump exempted a handful of key partners from planned steel and aluminium tariffs.

Mnuchin’s comments came after the administration announced a deal with South Korea that he said would limit the amount of steel imported into the US.

While this week may remain volatile as investors tweak portfolios prior to the end of the first quarter in shortened trading for many markets due to the Easter holiday, some say the sell-off is overdone.

Market conditions are looking favourable heading into the second quarter and asset allocations should remain oriented toward growth, according to JPMorgan Chase.

Elsewhere, crude oil fell after its biggest weekly gain since July. China launched its first ever crude-futures contract. The yuan-denominated futures on the Shanghai International Energy Exchange traded at 432.2 yuan a barrel ($68.48) for September settlement at 9:45am local time.

Here’s a list of what’s coming up this week:

US personal income and spending data for February, coupled with the Fed’s favored inflation gauge are the key pieces of US data. Income and spending are forecast to grow at the same pace as January but consensus sees the core PCE deflator picking up to 1.6% from 1.5%.

This week’s European economic agenda is highlighted by March CPI readings in the big four euro-area economies and output data for the UK Headline inflation probably ticked up in Germany, France, Spain and Italy.

A third estimate of UK GDP is set to confirm growth of 0.4% in the fourth quarter.

The US Treasury will probably auction about $294bn of bills and notes this week, its largest slate of supply ever.

And these are the main moves in markets:

Stocks

Japan’s Topix index declined 0.6% as of 12:49 pm in Tokyo. It fell as much as 1.2% earlier. Australia’s S&P/ASX 200 Index lost 0.6%. South Korea’s Kospi index rose 0.2%. Hong Kong’s Hang Seng Index fell 0.7%. Shanghai Composite Index lost 1.6%.

The MSCI Asia Pacific was down 0.4% after falling 3.5% last week. Futures on the S&P 500 Index added 0.5%.  

The underlying measure dropped 2.1% on Friday, bringing its weekly slide to 6%.

Currencies

The Bloomberg Dollar Spot Index fell 0.1%. The euro rose 0.2% to $1.2374. The pound traded at $1.4161, up 0.2%. The yen weakened 0.2% to 104.94 per dollar, edging back from the strongest in more than 16 months.

Bonds

The yield on 10-year Treasuries rose more than one basis point to 2.83%. Australia’s 10-year bond yield was steady at 2.65%.

Commodities.

West Texas Intermediate crude climbed 0.3% to $66.09 a barrel. Gold was flat at $1 347.39 an ounce, around the highest in more than a month.