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Sydney - Stocks stalled at recent highs, with the Nikkei 225 Stock Average snapping a record run of gains as the earnings season unfolded. The dollar traded at a three-month high, while metals led declines in commodities.
Japan’s stocks ended lower after fluctuating in the first half of the session as S&P 500 Index futures declined. Benchmarks elsewhere in Asia were mostly higher. Profit at Caterpillar, a bellwether for global growth, and solid manufacturing readings from Europe, Japan and the US helped push 10-year Treasury yields to 2.42% and lifted the greenback to the highest level since July.
The Australian dollar sunk to the lowest since July after inflation data damped the outlook for higher interest rates. India’s stock benchmark rose to a record high on a government plan to recapitalise banks.
"Calling the end of this market at the moment is very, very tricky because interest rates are going to remain low, earnings are OK," Neil Dwane, global strategist at Allianz Global Investors, said on Bloomberg Television.
"We are seeing good economic performance out of Europe, but all the equity markets now need earnings to rise."
More indications of broadening global growth are coming as the Federal Reserve and other central banks start to pull back on emergency monetary stimulus.
The European Central Bank is expected to announce a reduction in the size of its monthly stimulus spend at its policy meeting on Thursday, the biggest scheduled event for markets this week.
Australia’s inflation, a key reading for the monetary policy outlook, rose 0.6% in the September quarter versus an estimated 0.8% from the previous quarter, while annual CPI gained 1.8% versus a forecast of 2%.
The S&P BSE Sensex jumped as much as 1.6% after Prime Minister Narendra Modi’s government said late on Tuesday it will inject an unprecedented 2.11trn rupees ($32bn) into the banks over two years to revive growth.
Chinese President Xi Jinping’s new leadership line-up, unveiled on Wednesday, didn’t include any clear potential heirs.
The market had been anticipating the new members of the Politburo Standing Committee for hints at policy approach.
These are some of the key events coming up:
South Korea reports on GDP and Hong Kong on imports and exports, while Japan reports on CPI later in the week. The US economy probably expanded at about a 2.5% annualised pace in the third quarter, restrained in part by the effects of two hurricanes, economists forecast the government to report on Friday.
Companies reporting earnings this week include Alphabet, Microsoft and Twitter in the technology sector. Ford Motor, Volkswagen and Boeing headline cars and planes. Coca-Cola C and brewer Heineken NV join European banks including UBS Group, Deutsche Bank and Barclays.
The week also boasts rate decisions from the Bank of Canada, Norges Bank and Riksbank.
And here are the main moves in markets:
Stocks
Japan’s Topix index fell 0.3% and the Nikkei 225 declined 0.5% at the end of trading in Tokyo. Australia’s S&P/ASX 200 Index rose 0.1% while South Korea’s Kospi index was up 0.2%.
The Hang Seng Index climbed 0.4%, while the Shanghai Composite Index gained 0.2%. India’s Sensex advanced 1%.
Futures on the S&P 500 Index slid 0.2% in early European trading. The gauge climbed 0.2% on Tuesday, when the Dow Jones Industrial Average jumped 0.7% to a record high. Euro Stoxx 50 futures contracts fell 0.2%. The MSCI Asia Pacific Index was little changed.
Currencies
The Bloomberg Dollar Spot Index was flat near the highest in almost 15 weeks. The Aussie dollar tumbled 0.7% to 77.20 US cents. The yen was up 0.1% at 113.78 per dollar. The euro traded at $1.1764 after increasing 0.1% on Tuesday.
The kiwi extended a slide, down 0.1% to 69.01 US cents. It’s dropped to the lowest since May amid concern economic growth will be constrained under Prime Minister-elect Jacinda Ardern.
Bonds
The yield on 10-year Treasuries was little changed at 2.41%, the highest in about seven months, after climbing five basis points on Tuesday. Australia’s 10-year yield fell 1 basis point to 2.76%.
Commodities
Gold fell 0.2% to $1 273.73 an ounce, extending a drop in the previous session and heading for the lowest close in almost three weeks. West Texas Intermediate crude lost 0.3% to $52.34 a barrel following an advance of 1.1%.
LME copper slid 1.2% to $6 954 a metric ton, with all LME metals down.
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