Asian Stocks to Gain; Dollar Rises to 2019 High

(Aug 20): Asian stocks were set for modest gains on Tuesday after some signs of progress on trade negotiations and speculation of government stimulus to shore up economic growth. The dollar rose to this year’s high.

Futures were higher in Tokyo and Sydney, and little changed in Hong Kong. The S&P 500 Index gained for a third day, led by chipmakers, as U.S. Commerce Secretary Wilbur Ross said the nation will delay restrictions imposed on some business operations of China’s Huawei Technologies Co. The yen maintained declines as demand for havens ebbed.

Treasury yields rose despite U.S. President Donald Trump’s call for the central bank to cut rates by “at least 100 basis points.” Focus fell on Federal Reserve Bank of Boston President Eric Rosengren who pushed back against further rate cuts, arguing he’s not convinced that slowing trade and global growth will significantly dent the economy. The White House denied that the administration was considering payroll tax cuts as a way to bolster consumer spending, which was earlier reported by the Washington Post.

The latest headlines on trade and potential fiscal stimulus provide some reprieve for investors spooked by tumbling bond yields. The delay on Huawei was seen as encouraging for the long-awaited trade pact between the world’s two largest economies. Still, the company said the temporary relief doesn’t change the fact that it’s been treated “unjustly.”

Meanwhile, Trump’s top economic adviser, Larry Kudlow, will speak with business leaders this week amid concerns about the rising odds for a recession, the trade war and whipsawing markets. That comes before Fed Chairman Jerome Powell’s remarks about the challenges for monetary policy at the Jackson Hole symposium Friday.

Elsewhere, bunds tumbled as Germany was said to be preparing a stimulus plan that could be triggered by a deep recession. Oil steadied after rallying back above $56 a barrel.

Here are some notable events coming up:

Minutes of the Fed’s July meeting will provide details on the discussions leading to the first interest-rate cut in a decade when they are released on Wednesday.
Thursday brings the Bank Indonesia rate decision and press conference with Governor Perry Warjiyo.
Flash PMIs are due for the euro area on Thursday.
Kansas City Federal Reserve Bank hosts its annual central banking symposium in Jackson Hole, Wyoming, starting Thursday. Fed Chairman Jerome Powell will give remarks on Friday.

Here are the main moves in markets:
Stocks

Futures on the Nikkei 225 rose 0.3% in Singapore.
Australia’s S&P/ASX 200 Index contracts added 0.2%.
Hang Seng Index futures fell 0.1%.
S&P 500 futures were little changed. The S&P 500 rose 1.2%.

Currencies

The Japanese yen traded at 106.61 per dollar after dipping 0.3%.
The offshore yuan was stable at 7.0732 per dollar.
The Bloomberg Dollar Spot Index was little changed after gaining 0.3%.
The euro traded at $1.1082.

Bonds

The yield on 10-year Treasuries rose five basis points to 1.60%.
Australia’s 10-year bond yield rose three basis points to 0.94%.
Germany’s 10-year yield jumped four basis points to -0.65%.

Commodities

West Texas Intermediate crude dipped 0.2% to $56.11 a barrel. It jumped 2.4% earlier.
Gold’s spot price was at $1,495.25 after sliding 1.2%. – Bloomberg

 

Source: The Edge Markets