Early investors review and key events coming this week 

Asian stocks were mixed as investors continued to digest earnings, while bond and currency markets awaited an announcement on who will helm the Federal Reserve.

Equity benchmarks fluctuated in Japan, while Chinese shares fell, with the Shanghai Composite Index tumbling as much as 1.7 percent, the most this year on an intraday basis, as the nation’s bond slump deepened amid mounting deleveraging concerns. Hong Kong stocks pared gains. Profit reports due this week from some of the world’s largest companies may show if there’s enough juice in the earnings season to propel another leg higher for global shares. Speculation continues around who U.S. President Donald Trump will choose as the next Fed chair, with Governor Jerome Powell said to be the front-runner.

Trump last week stoked the sense of drama surrounding his choice, tweeting a video teasing an announcement he said would come this week. The president is leaning toward appointing Powell, according to three people familiar with the matter.

The slide in Chinese stocks came after a period of calm through the recent Communist Party Congress, as sovereign bonds extended a monthly rout amid concern the government will step up efforts to reduce leverage in the financial sector. Early signs are also surfacing that economic data may weaken, after solid figures for most of this year buoyed equities. That largely overshadowed gains on Wall Street on Friday after U.S. gross domestic product added to evidence of an improving global economy.

Earnings are coming thick and fast. HSBC Holdings Plc reported a third-consecutive quarterly increase in revenue on Monday. Three of China’s big four banks also report on Monday, after China Construction Bank earnings last week fueled optimism that interest margins and asset quality are improving. Sinopec and PetroChina probably improved earnings in the third-quarter as higher oil prices helped refining margins, analysts said. Their results are in focus after Exxon and Chevron each posted double-digit profit increases on Friday.

In Spain, the next hurdle in the battle with Catalonian separatists comes Monday, when public employees have to decide which side to follow. Barcelona’s streets flooded with hundreds of thousands of pro-unity demonstrators over the weekend, pressuring local lawmakers who pledged to defy Madrid’s direct control of the region. Prime Minister Mariano Rajoy on Friday ousted Catalan’s President Carles Puigdemont and dissolved his government after it declared independence.

On the U.S. political scene, developments in Washington will be closely watched after a grand jury approved the first charges stemming from special counsel Robert Mueller’s probe into Russian meddling in the 2016 election and possible collusion with Donald Trump’s campaign, according to multiple news reports.

Here are some key upcoming events this week:

• President Donald Trump has said he’ll reveal his choice to lead the Fed by Friday.
• The Fed’s next rate decision is on Wednesday, with economists expecting the central bank to keep rates at 1.25 percent and to increase them at the December meeting.
• The U.S. October payroll report comes out Friday. On Monday, personal income and spending data comes out, which features the Fed’s preferred inflation gauge.
• Trump starts an 11-day trip to Asia, his first as president, on Friday. He’s scheduled to visit Japan, South Korea, China, Vietnam and the Philippines for talks with leaders and to visit the APEC and Asean summits. Trade and security issues — particularly North Korea — will probably be in focus.
• A week packed with earnings releases culminates with Apple Inc. results Friday.

And these are the main moves in markets:

Stocks

• Japan’s Topix index and the Nikkei 225 Stock Average closed flat in Tokyo.
• South Korea’s Kospi index gained 0.1 percent and Australia’s S&P/ASX 200 Index rose 0.3 percent.
• The Shanghai Composite Index fell 1.1 percent. The Hang Seng Index in Hong Kong declined 0.2 percent.
• Futures on the S&P 500 Index slid 0.2 percent. The underlying gauge climbed 0.8 percent Friday, when the Nasdaq Composite surged 2.2 percent.

Currencies

• The Bloomberg Dollar Spot Index fell 0.1 percent, down for the first day in three.
• The yen was little changed at 113.67, near its weakest since July.
• The euro was little changed at $1.1615 and the pound traded at $1.3145.
• The Aussie bought 76.74 U.S. cents.
• The New Zealand dollar fell 0.5 percent to 68.41 U.S. cents. The country’s new finance minister, Grant Robertson, said at the weekend that reforming the Reserve Bank of New Zealand’s monetary policy mandate could potentially result in lower interest rates.

Bonds

• The yield on 10-year Treasuries edged lower and was little changed at 2.40 percent after rising as high as 2.48 percent during the Friday session.
• Australia’s 10-year yield declined four basis points to 2.73 percent in Monday trading. An auction of A$500 million of 3.25 percent government bonds maturing in April 2029 drew a coverage ratio of 6.5 times, according to Australian Office of Financial Management. The average yield accepted was at 2.811 percent.
• China’s 10-year yield climbed 6 basis points to 3.90 percent, touching the highest since 2014.

Commodities

• West Texas Intermediate crude was steady at $53.90 after rising 2.4 percent on Friday, when it hit the highest in about six months.
• Gold slipped 0.3 percent to $1,270.21 an ounce.

Source: Bloomberg – Asian Stocks Mixed as Chinese Shares, Bonds Tumble: Markets Wrap

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