Asian Stocks to Follow U.S. Gains; Dollar Slips: Markets Wrap

Asian stocks looked set to track gains in U.S. equities as China refrained from hitting back at the Trump administration on trade and investors awaited the start of earnings season and Chinese export data. The dollar slipped.

Futures signaled higher starts for stocks in Japan, Australia and Hong Kong. Technology shares led gains in the U.S. as the Nasdaq 100 Index hit a fresh high and the S&P 500 climbed to within 3 percent of its record. The dollar dropped against most peers after U.S. consumer prices rose less than forecast in June, while 10-year Treasury yields were little changed. West Texas crude remained close to $70 a barrel.

Officials in Beijing appear to be toning down their responses to Donald Trump’s tariff threats, amid a slowing economy, a falling stock market and a weakening currency. Despite optimism a bumper earnings season can propel equities higher, there remains disagreement as to length of the economic cycle — restructuring veteran Jim Millstein says the next economic downturn could strike in less than two years, while Guggenheim Partners’ Scott Minerd says there is now a higher chance of a deep U.S. recession as soon as next year.

Elsewhere, haven currencies continued a retreat with the yen and the Swiss franc dropping. The 2-year Treasury yield rose to a new multiyear high on a closing basis as the curve flattened. The VIX gauge of U.S. equity volatility declined, as did its European equivalent.

Terminal users can read more in Bloomberg’s Markets Live blog.

Marika Dysenchuk, JPMorgan Asset Management Fixed Income Investment Specialist, doesn’t see a full-scale trade war.

Source: Bloomberg

These are some events to look out for the remainder of this week:

  • Earnings season gets into gear with JPMorgan Chase & Co. and Citigroup Inc. among the largest companies due to give results, as well as India’s Infosys Ltd.
  • Chinese trade data due Friday at the end of the week will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said.

And here are the main market moves:

Stocks

  • Futures on Japan’s Nikkei 225 advanced 0.5 percent in Singapore.
  • Futures on Australia’s S&P/ASX 200 Index rose 0.4 percent.
  • Hang Seng futures climbed 0.5 percent.
  • The S&P 500 Index rose 0.9 percent.
  • The MSCI Emerging Market Index advanced 0.5 percent.

Currencies

  • The Bloomberg Dollar Spot Index declined 0.1 percent.
  • The euro was little changed at $1.1667.
  • The British pound was steady at $1.3202.
  • The Japanese yen was at 112.53 per dollar after touching 112.63.

Bonds

  • The yield on 10-year Treasuries was little changed at 2.85 percent.

Commodities

  • West Texas Intermediate crude was flat at $70.35 a barrel.
  • Brent crude rose 1.5 percent at $74.47 a barrel.
  • Copper gained 1.4 percent.

— With assistance by Cormac Mullen, Sarah Ponczek, and Randall Jensen