Asia Stocks Turn Higher as Investors Assess Crises: Markets Wrap
Yen poised for strongest week in a month; gold resumes gains
S&P 500 rebounds with dollar amid bullish economic reports
Asian shares rose as Japanese equities erased morning losses and investors assessed the risks from political crises in Brazil and Washington.
Japan’s Topix rose even as the yen headed for its strongest week in a month. Shares in Hong Kong and South Korea also climbed, while Australian shares were set for the worst week since October. Gold resumed gains after briefly halting a five-day rally, while the dollar and Treasuries were steady. Brazil’s currency, shares and bonds tumbled on Thursday amid calls for the country’s leader to resign over an alleged cover-up.
The S&P 500 Index clawed back part of the biggest selloff in eight months and volatility eased as U.S. President Donald Trump’s administration sought to move past controversies surrounding Russia that have threatened to ensnare its plans for tax cuts and infrastructure spending. Risk sentiment was also helped by better-than-expected U.S. jobless claims and regional manufacturing data.
Despite the rebound in the U.S., investors remain on alert. Wall Street has become more sensitive to Washington headlines as concerns grow over the strength of the global economy at a time when the Federal Reserve is considering further rate increases. The political upheavals were seen by some traders as a catalyst after global shares traded at an all-time high as recently as Tuesday.
“While investors will be relieved that yesterday’s selling looks unlikely to be repeated today, it’s too early to assume yesterday was a one-day wonder,” Ric Spooner, a market strategist at CMC Markets, wrote in a note. “Markets have clearly decided that the U.S. political situation has the potential to knock stock valuations off their relatively high perch.”
The crisis in Brazil added another layer of worries for investors. President Michel Temer has defied calls for him to step down, saying a Supreme Court probe will debunk allegations he participated in a cover-up. Meanwhile, geopolitics remained in the spotlight, amid reports that the U.S. Navy is moving a second aircraft carrier to the Korean peninsula and that Chinese jets intercepted a U.S. Air Force plane.
What investors will be watching:
- Federal Reserve Bank of St. Louis President James Bullard speaks to the Association for Corporate Growth at Washington University’s Knight Center in St. Louis.
- Trump’s first foreign trip as president will be to Riyadh on Saturday, at the invitation of Saudi King Salman bin Abdulaziz. After Saudi Arabia, Trump visits Tel Aviv and Rome before heading to a NATO summit in Brussels and the G-7 meeting in Sicily.
Here are the major moves in the markets:
- The MSCI Asia Pacific Index rose 0.1 percent as of 1:43 p.m. in Tokyo. Japan’s Topix index climbed 0.2 percent, after sliding 1.3 percent on Thursday. The gauge is heading for a loss of 1.4 percent for the week.
- Australia’s S&P/ASX 200 Index fell 0.3 percent and South Korea’s Kospi was up 0.2 percent. The Hang Seng Index rose 0.3 percent and the Shanghai Composite was little changed.
- S&P 500 futures were flat. The benchmark index rose 0.4 percent on Thursday after plunging 1.8 percent in the previous session, its worst day since Sept. 9. The Stoxx Europe 600 Index declined 0.5 percent, paring a drop that reached 1.2 percent.
- Brazil’s Ibovespa Index tumbled 8.8 percent on Thursday, the most since October 2008, as political crisis returned to the country after last year’s impeachment process.
- A Japan-traded ETF tracking Brazil’s Ibovespa Index dropped 5.4 percent after an even larger decline on Thursday.
- The Bloomberg Dollar Spot Index was down less than 0.1 percent after increasing 0.3 percent Thursday, reversing some of the selloff that took it to its lowest level since the U.S. election. The gauge is 1.1 percent lower for the week.
- The yen rose 0.1 percent to 111.37 per dollar after falling 0.6 percent on Thursday. The currency is up 1.8 percent for the week, its strongest performance in a month.
- The yield on 10-year Treasuries was little changed. It ended Thursday flat at 2.23 percent after earlier sliding to as low as 2.18 percent.
- Bonds of Brazil’s state-controlled energy company Petroleo Brasileiro SA dropped by the most in six months on Thursday amid the nation’s political crisis.
- Gold rose 0.1 percent to $1,248.67 an ounce after it fell 1.1 percent on Thursday to reverse part of its five-day rally. The metal is up 1.7 percent this week.
- West Texas crude rose 0.9 percent to $49.80, the highest since April 26, as OPEC members supported Saudi Arabian and Russian pledges to extend supply cuts. Oil is up 4.1 percent for the past five days, its biggest weekly gain since the end of March.