Stocks mixed, yen rises as Treasury yields decline

Sydney - Asian stocks fluctuated and the yen gained as traders adopted a risk-off approach, digesting comments from President Donald Trump’s new economic adviser. Treasury yields extended declines after lacklustre US retail sales stoked concern that consumer spending is cooling, weighing on the dollar.

Stock benchmarks fell in Tokyo, and were little changed in Sydney, Seoul and Hong Kong. US futures swung between gains and losses. Earlier, the S&P 500 fell for a third day, with volume more than 10% below the 30-day mean.

Incoming White House economic adviser Larry Kudlow signalled Trump would support a strong dollar and take a tougher line on trade with China. The yen gained for a second day.

Treasury yields tested early-February lows on bets the Federal Reserve won’t accelerate the pace of interest-rate hikes.

"News that broke this morning regarding the replacement of ex-economic advisor Gary Cohn by Larry Kudlow interestingly has not been significantly well-received by the market," said Jingyi Pan, market strategist at IG Asia Pte in Singapore.

"One reason underpinning this lingering fear may be the new chief economic advisor’s stance on China, which adds to the tension with Kudlow having targeted the country in his first public remark."

The lacklustre retail sales data provided the last major economic indicator prior to the Fed’s policy decision next week. While an increase in borrowing costs at the meeting is pretty much a done deal, it remains an open question as to whether US policy makers lift their expectations for the pace of future increases.

Elsewhere, oil steadied near $61 a barrel as signs of stronger US fuel consumption balanced OPEC forecasting for the first time that new supplies from its rivals will exceed demand growth this year. Bitcoin drifted toward $8 000.

Terminal users can read more in our markets blog.

Here are some of the key things happening this week:

Japan industrial production is out on Friday. Inflation data Thursday is a focal point in the euro area. EU27 government officials discuss the European Union’s Brexit position.

And these are the main moves in markets:

Stocks

Topix index fell 0.4% as of 12:14 pm Tokyo time. Hong Kong’s Hang Seng Index was flat. Kospi index was little changed. Australia’s S&P/ASX 200 Index lost 0.2%. Futures on the S&P 500 Index added 0.1%.

The MSCI Asia Pacific Index fell 0.2%.  

Currencies

The Bloomberg Dollar Spot Index fell 0.1%. The Japanese yen jumped 0.3% to 106.01 per dollar. The euro rose 0.1% to $1.2379.

Bonds

The yield on 10-year Treasuries fell one basis point to 2.81%. Japan’s 10-year yield fell less than one basis point to 0.046%. Australia’s 10-year yield fell two basis points to 2.72%.

Commodities

West Texas Intermediate crude rose 0.2% to $61.10 a barrel. Gold rose 0.2% to $1 326.92 an ounce. LME copper was steady at $6 990 per metric tonne.