Asian Stocks to Track U.S. Higher; Treasuries Drop
(Oct 16): Asia stocks looked set to gain Wednesday after their U.S. peers touched four-week highs as earning season got underway. The pound strengthened as the U.K. and European Union moved closer to a Brexit deal.
Futures were higher in Tokyo, Sydney and Hong Kong. The S&P 500 Index topped 3,000 on an intraday basis for the first time in three weeks. Treasuries retreated, with 10-year yields close to four-week highs, amid the risk-on backdrop.
Investors are scrutinizing earnings, given the global backdrop of slowing growth and a host of unpredictable macro risks. While sentiment has been supported after some progress in trade talks between the U.S. and China, economic concerns remain. The International Monetary Fund made a fifth-straight cut to its 2019 global growth forecast, citing a broad deceleration across the world’s largest economies as trade tensions undermine the expansion.
On the earnings front in the U.S., JPMorgan’s third-quarter results beat estimates, sending its shares higher, while Johnson & Johnson raised its sales and earnings forecast for the year.
Meanwhile, the pound strengthened and gilts fell after two EU officials said negotiators in Brussels are closing in on a draft Brexit deal that could lead to a breakthrough before the end of Tuesday. Crude oil fell for a second day and gold dropped.
Elsewhere, the Turkish lira jumped and the country’s benchmark stock index rose after U.S. President Donald Trump imposed milder penalties over its military campaign in Syria than U.S. lawmakers had demanded.
Here are some key events coming up this week:
Wednesday brings a monetary policy decision in South Korea.
U.S. retail sales are forecast to increase for a seventh straight month. Sales in the “control group” are also expected to rise. Consumer spending is carrying the weight of U.S. economic growth so the data will be monitored closely for any signs of slowing.
China releases third-quarter GDP, September industrial production and retail sales data on Friday.
Here are the main moves in market:
Stocks
Futures on the Nikkei 225 rose 1.4%.
Australia’s S&P/ASX 200 Index contracts gained 0.8%.
Hong Kong’s Hang Seng Index futures added 0.6%.
The S&P 500 Index increased 1%.
Currencies
The yen was steady at 108.82 per dollar after depreciating 0.4% to hit the weakest in more than 19 weeks.
The offshore yuan was at 7.0847 per dollar.
Bloomberg Dollar Spot Index dipped 0.1%.
The euro traded at $1.1032.
The pound was at $1.2786 after jumping 1.4%.
Bonds
The yield on two-year Treasuries climbed three basis points to 1.62%, reaching the highest in more than two weeks on its fifth straight advance. The yield on 10-year Treasuries gained four basis points to 1.77%, hitting the highest in more than three weeks with its fifth straight advance.
Commodities
West Texas Intermediate crude dipped 1.3% to $52.91 a barrel.
Gold was at $1,481.02 an ounce after falling 0.8%. – Bloomberg
Source: TheEdgeMarkets