Asia Stems Equity Drop as Angst Fades; Gold Drops: Markets Wrap

Asian stocks largely halted the slide triggered by an escalation in tensions between the U.S. and North Korea as American officials tried to ease concerns that sparked a flight to safe-haven assets.

The MSCI Asia Pacific Index was little changed in muted trading, with Japanese shares mixed, and Australian equities climbing, while South Korea’s benchmark gauge extended declines. Treasuries pared gains and U.S. equities recouped declines in the final hour of trading as U.S. Secretary of State Rex Tillerson signaled military confrontation was not imminent. He was one of several officials in the Trump administration who sought to fine-tune the message on how it will address North Korean threats. Gold pulled back after climbing to the highest since mid-June.

Saber rattling lifted geopolitical tensions between North Korea and the U.S. to unprecedented levels this week, dragging down global equities from a record high and spurring a flight to haven assets like the yen and gold. 

As worries show signs of abating, attention may flip back to the implications for monetary policy and U.S. economic growth with a speech by Fed Bank of New York President William Dudley due ahead of Friday’s inflation data. Chicago Fed President Charles Evans said it would be “reasonable” to announce the beginning of a reduction of the central bank’s balance sheet next month, while cautioning that disappointing inflation data may delay interest-rate increases as technological disruption dampens price pressures.

Ari Wald of Oppenheimer & Co. explains why he’s still bullish on stocks.

Source: Bloomberg

Some notable money managers are continuing to express concerns, advising to reduce risk in portfolios. Pimco told investors to pare U.S. equities and junk bonds, but keep exposure to real assets, such as inflation-linked debt, commodities and gold. T. Rowe Price cut its stock allocation to the lowest level since 2000.

Terminal users can read more in our Markets Live blog.

Here are some important upcoming events:

  • The Philippine central bank will probably hold its benchmark at 3 percent on Thursday at the first meeting at which Governor Nestor Espenilla will preside.
  • U.K. factory output for June is and France industrial production are due Thursday.
  • Fed’s Dudley delivers opening remarks at the Economic Press Briefing on Wage Inequality in the Region in New York City, followed by a question and answer session.

Here are the main moves in markets:

Stocks

  • Japan’s Topix index was little changed and the Nikkei 225 Stock Average rose 0.1 percent. Australia’s S&P/ASX 200 Index advanced 0.4 percent. 
  • South Korea’s Kospi index fell 0.2 percent. The benchmark gauge dropped 1.1 percent on Wednesday. The Hang Seng Index in Hong Kong and the Shanghai Composite Index opened lower.
  • Futures on the S&P 500 Index fell 0.1 percent as of 10:39 a.m. in Tokyo. The underlying gauge closed less than 0.1 percent lower, all but erasing losses of as much as 0.5 percent.

Currencies

  • The kiwi dollar rose as much as 0.5 percent and was trading at 73.39 U.S. cents. New Zealand’s central bank reinforced its expectation to maintain a record-low interest rate.
  • The yen was flat at 110.07.
  • The euro was at $1.1757 and the Bloomberg Dollar Spot Index was little changed.
  • The Australian dollar climbed 0.2 percent to 79.05 U.S. cents.

Bonds

  • The yield on 10-year Treasuries held at 2.25 percent.
  • Australia’s 10-year bond yield was up one basis point to 2.65 percent.
  • Germany’s 10-year bund yield declined four basis points to 0.43 percent on Wednesday.

Commodities

  • Gold slipped 0.1 percent to $1,275.96 an ounce after surging 1.3 percent on Wednesday.
  • West Texas Intermediate crude was little changed at $49.56 a barrel after climbing 0.8 percent the previous session. U.S. production eased and crude inventories extended declines, trimming a glut.

Leave a Reply

Your email address will not be published. Required fields are marked *

*

eighteen + nine =