The Euro and the Yen fell, Asian Stocks gain; Key events to watch this week
Most Asian stocks gained Monday as U.S. equity futures jumped in the wake of news that the Sino-American trade war is on hold for now. Treasury yields nudged higher, taking the dollar with them.
Equity benchmarks rose in Hong Kong, China and Korea, while they fluctuated in Japan and Australia. The S&P 500 Index contracts gained 0.6 percent. Oil futures climbed. U.S. Treasury Secretary Steven Mnuchin said the U.S. was “putting the trade war on hold,” amid progress in talks with China. Stocks had closed lower Friday and Treasury yields dropped under 3.1 percent amid mixed signals on trade. Safe-haven assets like the yen and gold declined.
“The trade talks over the weekend suggest that real trade-war outcomes are very unlikely,” Robert Mead, co-head of Asia-Pacific at Pacific Investment Management Co., said in a Bloomberg Television interview. “This seems to suggest that global trade stays healthy — we don’t have to worry too much about that.” Mead said the dollar rally “probably has a bit further to go.”
Investors this week will be keeping a close eye on the minutes of May’s Federal Reserve meeting, to be released Wednesday, along with preliminary purchasing manager indexes in the euro zone. Geopolitics remains in focus as South Korea’s president visits Washington to discuss North Korea and Brexit negotiations resume in Brussels.
Elsewhere, emerging-market currencies continued to come under pressure. The Indonesian rupiah weakened as an interest-rate hike last week failed to stem a sell-off, and the central bank vowed to continue to intervene in the forex and bond markets. The Malaysian ringgit dropped for a ninth day to be on course for the longest stretch of losses since November 2016. The euro steadied near a five-month low as Italy’s two populist leaders agreed on a prime minister and are set to propose a cabinet as early as Monday.
These are some key events to watch this week:
- On Monday, Philadelphia Fed President Patrick Harker, Atlanta Fed President Raphael Bostic and Minneapolis Fed President Neel Kashkari all speak at various events.
- Brexit negotiations resume in Brussels Tuesday, and South Korea’s president visits Washington to discuss North Korea
- Also Tuesday, Facebook founder/CEO Mark Zuckerberg is to be grilled by the European Parliament on his company’s use of personal data.
- Federal Reserve releases minutes of policy makers’ May 1-2 meeting on Wednesday; U.S. new home sale also released as are euro-area and Japan PMIs
- Thursday sees the Bank of England Markets Forum at Bloomberg London. Speakers include BOE Governor Mark Carney and New York Fed President William Dudley
- At the St. Petersburg Forum Friday, Presidents Putin and Emmanuel Macron, IMF Managing Director Christine Lagarde, and Japan Prime Minister Shinzo Abe participate on a panel moderated by Bloomberg News editor-in-chief John Micklethwait
- Also Friday, European Union finance ministers discuss the latest on Brexit talks, in Brussels.
These are the main moves in markets:
- Japan’s Topix index was little changed as of 2 p.m. in Tokyo.
- Australia’s S&P/ASX 200 Index was little changed.
- Kospi index gained 0.2 percent.
- Hang Seng Index rose 1.3 percent. Shanghai Composite Index was up 0.8 percent.
- S&P 500 futures were up 0.6 percent. The S&P 500 closed down 0.3 percent on Friday.
- The MSCI Asia-Pacific Index gained 0.1 percent.
- The Bloomberg Dollar Spot Index rose 0.2 percent. It climbed 0.3 percent Friday.
- The Japanese yen fell 0.4 percent to 111.23 per dollar.
- The euro fell 0.2 percent to $1.1752.
- The rupiah slid 0.3 percent to 14,199 per dollar.
- The yield on 10-year Treasuries nudged higher to 3.0688 percent after sinking six basis points on Friday.
- Australia’s 10-year bond yield fell two basis points to 2.88 percent.
- West Texas Intermediate crude rose 0.7 percent to $71.81 a barrel Monday.
- Gold lost 0.4 percent to $1,288.23 an ounce.
- Copper futures rose 0.2 percent to $6,871 a metric ton.