Aussie dollar tumbled, Kiwi extended a slide, Gold fell 0.3 percent, Japan’s Topix index rose 

Gains in Asian equities stalled at recent highs, while optimism in the world economy and encouraging earnings reports buoyed the dollar and bond yields. The Australian dollar sunk to its lowest since July after inflation data damped the outlook for higher interest rates.

Japan’s stocks fluctuated with the yen. The Nikkei 225 Stock Average is poised for a 17th consecutive session of gains. Profit at Caterpillar Inc., a bellwether for global growth, reinforced the view that the international economic expansion is the most synchronized since the start of the decade. Alongside solid manufacturing readings from Europe, Japan and the U.S., that helped pushed 10-year Treasury yields to 2.42 percent and lifted the greenback to the highest level since July. India’s stock benchmark rose to a record high on a government plan to recapitalize 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 Thursday, the biggest scheduled event for markets this week.

Australia’s inflation, a key reading for the monetary policy outlook, rose 0.6 percent in the September quarter versus an estimated 0.8 percent from the previous quarter, while annual CPI gained 1.8 percent versus a forecast of 2 percent.

The S&P BSE Sensex jumped as much as 1.6 percent after Prime Minister Narendra Modi’s government said late on Tuesday it will inject an unprecedented 2.11 trillion rupees ($32 billion) into the banks over two years to revive growth. Read more on the market’s reaction here.

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 U.S. economy probably expanded at about a 2.5 percent annualized 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 Inc., Microsoft Corp. and Twitter Inc. in the technology sector. Ford Motor Co., Volkswagen AG and Boeing Co. headline cars and planes.
• Coca-Cola Co. and brewer Heineken NV join European banks including UBS Group AG, Deutsche Bank AG and Barclays Plc.
• 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 rose 0.1 percent as did the Nikkei 225 as of 1:24 p.m. in Tokyo.
• Australia’s S&P/ASX 200 Index rose 0.1 percent with South Korea’s Kospi index.
• The Hang Seng Index climbed 0.7 percent, while the Shanghai Composite Index was little changed.
• India’s Sensex was up 0.7 percent.
• Futures on the S&P 500 Index slid 0.1 percent. The gauge climbed 0.2 percent on Tuesday, when the Dow Jones Industrial Average jumped 0.7 percent to a record high.
• The MSCI Asia Pacific Index climbed 0.2 percent.

Currencies

• The Bloomberg Dollar Spot Index rose 0.1 percent to the highest in almost 15 weeks.
• The Aussie dollar tumbled 0.8 percent to 77.18 U.S. cents.
• The yen was at 113.93 per dollar.
• The euro traded at $1.1757 after increasing 0.1 percent Tuesday.
• The kiwi extended a slide, down 0.3 percent to 68.88 U.S. 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 2.42 percent, the highest in about seven months, after climbing five basis points on Tuesday.
• Australia’s 10-year yield was steady at 2.77 percent.

Commodities

• Gold fell 0.3 percent to $1,273.29 an ounce, extending a drop in the previous session.
• West Texas Intermediate crude was at $52.43 a barrel following an advance of 1.1 percent.

Source: Bloomberg – Stocks in Asia Stall; Aussie at Three-Month Low: Markets Wrap

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