Asia stocks retreat from six-week high; yen gains: Market wrap


  • Markets
  • Wednesday, 16 Jan 2019

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Asian equities dropped from a six-week high and the yen advanced as investors assessed prospects for global policy makers to arrest a slowdown in growth.

The pound and U.K. stock futures fluctuated, paring losses, in advance of a no-confidence vote in British Prime Minister Theresa May following the resounding defeat of her Brexit deal. Japanese equities led declines in Asia, with mixed performances among other benchmarks. 

Earlier, the S&P 500 Index climbed the most in a week following China’s plans for boosting spending through tax cuts. The 10-year Treasury yield held at 2.71 percent, while oil traded around $52 a barrel in New York.

The yuan dipped as the People’s Bank of China injected a record amount of funds into the banking system through open-market operations as it moves to sustain liquidity ahead of lunar new year holidays. The dollar was little changed.

While optimism prevailed on Tuesday following China’s pledges to step up efforts to support growth, there are plenty of worries to give investors pause before taking this month’s rally in equities further. 

The political impasse in Washington continues to leave swathes of the federal U.S. government shuttered, and the U.K.’s Brexit drama threatens to impair business confidence in the second-largest European economy. May now has to revamp her proposal by the end of March and faces a confidence vote in Parliament on Wednesday.

Meantime, the yield spread between five-year and 30-year Treasuries steepened Tuesday, touching a level not seen since February amid further comments from Federal Reserve officials stressing patience when it comes to policy changes.

Here are some important events coming up:

• A confidence motion vote will take place at 7 p.m. in London as the opposition Labour Party tries to force a general election.

•  Some of the world’s biggest banks announce earnings, including Bank of America, Morgan Stanley and Goldman Sachs. Alcoa, Indian IT company Mindtree, Netflix, Taiwan Semiconductor and BlackRock also post results. 

These are the main moves in markets:

Stocks

• The MSCI Asia Pacific Index fell 0.1 percent as of 1:40 p.m. in Tokyo Japan’s Topix index slid 0.2 percent.

• Hang Seng fell 0.3 percent. 

• Shanghai Composite dipped 0.1 percent.

• Australia’s S&P/ASX 200 Index rose 0.2 percent. Futures on the S&P 500 gained 0.3 percent. The S&P 500 Index rose 1.1 percent.

Currencies

• The yen rose 0.2 percent to 108.50 per dollar. 

• The offshore yuan fell 0.1 percent to 6.7867 per dollar. 

• The Bloomberg Dollar Spot Index was flat after climbing 0.3 percent on Tuesday.

• The euro bought $1.14051.

• The British pound fell 0.1 percent to $1.2845.

Bonds

• The yield on 10-year Treasuries remained at 2.71 percent.

• Australia’s 10-year bond yield held around 2.28 percent. 

Commodities

•  West Texas Intermediate crude was little changed at $51.13 a barrel.

• Gold was flat at $1,288.73 an ounce. - Bloomberg

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