Investors moves review: Euro, yen and yuan rose; Technology stocks selloff 

• ECB’s Draghi says policy may become tighter from next year
• Banks rally as Yellen says economy can withstand higher rates

A selloff in technology stocks extended into the Asian trading session, while bank shares rallied with government bond yields on the prospect of higher interest rates.

Samsung Electronics Co., Taiwan Semiconductor Manufacturing Co. and Tencent Holdings Ltd. led tech shares lower on the MSCI Asia Pacific Index. The euro remains one of the best performing currencies this quarter as ECB chief Mario Draghi offered upbeat remarks that weighed on government bonds. The dollar held on to losses as Janet Yellen signaled the U.S. economy can withstand higher interest rates and said asset valuations were rich. The yuan surged both onshore and overseas for a second day amid speculation of central bank intervention. Oil resumed its decline on signs of a supply glut.

Central banks remain the key drivers for markets this week. Draghi said he sees room for paring back stimulus, while Yellen joined her deputy saying some asset valuations are frothy. Those comments come ahead of more appearances from policy makers at the conference in Portugal that concludes on Wednesday.

U.S. equities volatility jumped the most in six weeks amid of host of issues weighing on investors. The International Monetary Fund cut its outlook for the U.S. economy, removing assumptions of President Donald Trump’s plans to cut taxes and boost infrastructure spending. Other risks to the markets include oil’s slide into a bear market and the continuing selloff of technology stocks, while a cyberattack that hit port operators from New York to Rotterdam also spooked traders.

Here’s what lies ahead for investors:

• The Federal Reserve is set to announce the results of the second part of its annual bank stress test, which will determine whether lenders can increase dividends and share repurchases.
• China’s PMI might have declined in June after unexpectedly remaining unchanged in May, reflecting government offers to cut overcapacity and leverage. That reading is due Friday.
• Also slated this week: Japanese inflation, factory output, unemployment, household consumption and housing starts.

Here are the main moves in markets:

Currencies

• The euro rose 0.1 percent to $1.1350 as of 1:24 p.m. in Tokyo, after surging 1.4 percent on Tuesday.
• The Bloomberg Dollar Spot Index was down slightly after falling 0.6 percent in the previous session.
• The yen climbed 0.2 percent to 112.11 per dollar after the Japanese currency weakened 1 percent over the past two sessions.
• The offshore yuan climbed 0.2 percent after surging 0.6 percent on Tuesday. The onshore currency also rose 0.2 percent.
• The Canadian dollar jumped 0.4 percent, adding to a similar gain on Tuesday. Bank of Canada Governor Stephen Poloz said in a CNBC interview that interest rate cuts “have done their job” and that levels are now “extraordinarily low.”

Stocks

• Futures on the S&P 500 Index dropped 0.1 percent. The underlying gauge lost 0.8 percent Tuesday, the most since May 17, as technology and health-care shares declined.
• Japan’s Topix index swung from gains to losses, with a rally in banks offset by declines in technology companies. Australia’s S&P/ASX 200 index rose 0.4 percent. South Korea’s Kospi index lost 0.3 percent, with Samsung down 1 percent. The Taiex slid 1.1 percent as Taiwan Semiconductor dropped 1.2 percent.
• The Hang Seng lost 0.4 percent, with Tencent Holdings off 1 percent. Investors are watching the Hong Kong market closely after a string of small-cap stocks suddenly plunged Tuesday, with traders pointing to links between some of the companies and a brokerage that’s under regulatory investigation.
• The Shanghai Composite advanced less than 0.1 percent.

Bonds

• The yield on 10-year Treasuries fell less than one basis point, after jumping seven basis points Tuesday to 2.21 percent.
• Australian 10-year government bond yields rose eight basis points to 2.44 percent.

Commodities

• WTI futures fell 0.4 percent to $44.07 after climbing 4 percent in the previous four sessions. Oil tumbled into a bear market last week on concerns that expanding global supply will counter output cuts from OPEC and its partners including Russia.
• Gold rose 0.4 percent to $1,252.17 an ounce, climbing for a second day.

Source: Bloomberg – Tech Rout Hits Asia Shares; Bonds Fall on Rate Bet: Markets Wrap

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