Asia Stocks Fall, Aussie Dollar Fell, Yen Rose, Euro Was Flat; Key Events Coming Up This Week 

A rally that carried Asian stocks to record highs petered out and the dollar was little changed as investors turned their attention to U.S. tax reform ahead of a busy week with data on the health of the world’s biggest economies. An OPEC meeting will discuss extending supply cuts.

Stocks fell as Chinese stocks resumed their decline, while Japanese equities ended lower after erasing earlier gains. The Bloomberg dollar index fluctuated as the yen was the biggest gainer against the greenback. The South African rand halted its slide triggered by S&P Global Ratings cutting the country’s local-currency debt to junk on Friday, sending the currency 2 percent lower. Bitcoin was up about 17 percent compared with trading late on Friday.

Economic reports from the U.S., China, Japan and India this week will allow investors to assess progress for global growth. While equities markets trading at record levels show money managers’ enthusiasm for an earnings expansion as economies grow, bond investors are betting inflation concerns will limit the pace at which interest rates will rise in the U.S. The Organization of Petroleum Exporting Countries and Russia, a partner in the deal, have crafted the outline of an agreement to extend curbs to the end of next year.

“Given the packed week filled with event risks, I believe Asian investors are taking some money off the table ahead of the U.S. open,” said Jingyi Pan, a market strategist at IG Asia Pte in Singapore. “Tax reform and OPEC optimism has given Asian equity markets a substantial boost and both leads will be put to test this week with the Senate’s vote and OPEC meeting in tow.”

Asian regional benchmarks are trading close to record highs. The MSCI Asia Pacific Index rose close to the 70 level — signaling equities are in overbought territory — on its 14-day average relative strength index on Friday.

Jerome Powell will be in the hot seat on Tuesday in Washington when his confirmation hearing begins. Most economists expect the event to go smoothly, but senators will get a chance to probe President Donald Trump’s nominee for Fed chair on his views on the economy and deregulation. Outgoing Chair Janet Yellen will address the Joint Economic Committee of Congress on Wednesday.

Here are some key events coming up this week:

• Asia’s three-biggest economies report key data. In China, the official and Caixin manufacturing PMIs are expected to show mostly steady momentum. Japan industrial production is forecast to have rebounded in October, but CPI may show a sharp divergence between headline and core inflation, Bloomberg Intelligence said. And while third-quarter India GDP is believed to be improving, the impact from the GST has been more severe than anticipated.
• The second print of third-quarter U.S. GDP on Wednesday may be revised up thanks to consumer spending and inventory accumulation, Bloomberg Intelligence said. Consensus projects a 3.2 percent reading.
• The core PCE deflator, the Fed’s preferred gauge of inflation, is due Thursday and may have ticked up to 1.5 percent, still below the central bank’s target.
• OPEC meets in Vienna on Thursday.

These are the main moves in markets:

Stocks

• The Topix index fell 0.2 percent at the close in Tokyo and the Nikkei 225 Stock Average also retreated 0.2 percent.
• Hong Kong’s Hang Seng Index fell 0.7 percent and the Shanghai Composite Index lost 1 percent.
• Australia’s S&P/ASX 200 Index closed slightly firmer.
• The Kospi index in Seoul declined 1.3 percent.
• Futures on the S&P 500 fell 0.1 percent. The underlying gauge gained 0.2 percent, propelled by gains in retail and technology stocks benefiting from Black Friday sales.
• The MSCI Asia Pacific Index dropped 0.5 percent.

Currencies

• The Bloomberg Dollar Spot Index was little changed after swinging between gains and losses and falling to the lowest in eight weeks on Friday.
• The Aussie dollar fell 0.1 percent to 76.09 U.S. cents.
• The yen rose 0.2 percent to 111.33 per dollar.
• The rand rose 0.6 percent to 14.0702 per dollar, paring some of Friday’s 2 percent slide.
• The euro was flat at $1.1927.
• The pound traded at $1.3325, down 0.1 percent.

Bonds

• The yield on 10-year Treasuries was steady at 2.34 percent.
• Australia’s 10-year yield rose two basis points to 2.52 percent.

Commodities

• West Texas Intermediate crude fell 0.4 percent to $58.69 a barrel, hovering near the highest in more than two years.
• Gold traded at $1,290.92 an ounce.

Source: Bloomberg – Asia Stocks Fall as Rally Curtailed; Yen Gains: Markets Wrap

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