Asian Stocks Rise, Bonds Slip Before Trump Speech: Markets Wrap 

Asian Stocks
  • Odds for U.S. interest rate hike in March rise to 50%
  • Trump speech Tuesday to be scrutinized for spending plans

Asian stocks erased gains as a rally in Tokyo faltered and the yen strengthened ahead of Donald Trump’s address to Congress. Crude remained above $54 a barrel on the final day of trading for the month.

Japan’s Topix index almost erased its earlier rally in the final half hour of trading. The index rose as much as 1 percent, following gains in the U.S. that pushed the winning streak for the Dow Jones Industrial Average to 12 sessions, the longest in 30 years. The dollar weakened after a two-day gain, while Treasuries were flat after falling on Monday as the odds of a Federal Reserve interest-rate hike in March jumped.

Fed Bank of Dallas President Robert Kaplan said policy makers should raise interest rates “sooner rather than later” and not pay excessive attention to market expectations. The chance of a rate hike at the central bank’s March 14-15 meeting jumped to 50 percent, federal funds futures showed, from 34 percent just five days ago.

The shift in odds on rates came as the White House began sketching its spending plans. Trump on Monday said he’d spend “big” on infrastructure, while adding that tax details won’t become clear until after the costs of repealing the Affordable Care Act are known. Even as global equities have climbed to record levels, investors have remained wary as they await details of Trump’s economic plans and watch for signals on the timing for higher rates.

“Dollar bears should take caution if Trump follows through on infrastructure and Yellen ratchets up the rate-hike rhetoric to end the week,” said Stephen Innes, senior currencies trader in the Asia Pacific at Oanda Corp. “The big question for the market is, will Trump use tonight’s platform to execute?”

What’s coming up this week:

  • In Trump’s address before a joint session of Congress on Tuesday night in the U.S., the president is expected to outline his priorities for the nation.
  • Fed officials are making speeches this week, including Chair Janet Yellen who addresses an event in Chicago on Friday.
  • The Bank of Japan is due to introduce more clarity on its bond-purchase operations by announcing the exact dates of its monthly purchases and how much it plans to buy.
  • This week’s economic data include U.S. personal income and spending. India and Australia will report on fourth-quarter GDP. China’s PMI data are expected to show continued expansion.

Here are the main moves in markets:

Currencies

  • The yen added 0.2 percent to 112.47 per dollar as of 3:13 p.m. in Tokyo, after sliding 0.5 percent to end a three-day winning streak.
  • The Aussie climbed 0.2 percent to 76.87 U.S. cents ahead of Wednesday’s GDP report.
  • The Bloomberg Dollar Spot Index fell 0.1 percent after a 0.1 percent advance on Monday.

Stocks

  • The MSCI Asia Pacific Index lost 0.1 percent, erasing an earlier gain heading lower for a third straight day. The index is up 2.2 percent for February, after a 4.9 percent gain for January.
  • The Topix ended with a gain of 0.1 percent, following Monday’s 1 percent decline.
  • New Zealand’s S&P/NZX 50 Index jumped 1.3 percent, the most since Jan. 4. Australia’s S&P/ASX 200 Index declined 0.2 percent and South Korea’s Kospi increased 0.3 percent.
  • Hong Kong’s Hang Seng fell 0.5 percent and the Shanghai Composite Index advanced 0.1 percent. The Hang Seng China Enterprises Index fell 0.3 percent, reducing its monthly gain to 5.1 percent.

Bonds

  • Yields on 10-year Treasuries fell less than one basis point to 2.36 percent after rising five basis points Monday, reversing three straight days of declines.
  • Australian benchmark yields added one basis point to 2.72 percent.

Commodities

  • WTI crude futures edged up 0.3 percent to $54.20 a barrel, near the highest since July 2015.
  • Gold rose 0.1 percent to $1,254.17 after dropping 0.4 percent in the previous session.
  • Iron ore futures on the Dalian Exchange fluctuated after Monday’s 2.7 percent jump.

Source: Bloomberg

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