Asia Stocks Drop, Yen Steady Before Trump Speech

EghtesadOnline: Asian stocks fell while the yen and gold were steady after three days of gains as investors grew cautious before speeches this week from Donald Trump and Janet Yellen.

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27 February 2017

Insurers and banks dragged equities lower in Tokyo, after Treasury yields fell last week by the most since July. Oil traded above $54 a barrel, while yen and gold were near the highest levels in three months. Iron ore rallied after last week’s declines, according to Bloomberg.

The rally in global equities that helped push their value above $70 trillion is losing momentum as money managers grapple with political uncertainty and the Federal Reserve’s schedule for lifting borrowing costs. Investors will be hoping for details on Trump’s spending plans as lingering concern about the timing of U.S. fiscal stimulus weighed on the dollar this year, testing its post-election surge. Markets from stocks to currencies have been subject to daily fluctuations as investors hang on each word from central bank officials and politicians.

“We are not sure what Trump’s policies are going to be and whether he’s going to implement them at all,” Kumar Palghat, a portfolio manager at Kapstream Capital, told Bloomberg TV in Sydney Monday. We should get some detail from Trump’s speech Tuesday, he said.

What’s ahead for this week:

In Trump’s address before a joint session of Congress on Feb. 28, the president is expected to lay out his plans for tax and health-care reform and infrastructure spending.

Investors will also be watching comments from Fed officials, including Yellen, who speaks at an event in Chicago at the end of the week.

This week’s economic data include U.S. personal income and spending. India and Australia will report on fourth-quarter GDP. China’s PMI data are expected to show continued expansion. Japan reports on factory output, housing starts and capital spending.

Macau’s gambling rebound probably accelerated this month, driven by Chinese high rollers. Numbers are due Wednesday.

Here are the main moves in markets:

Stocks

The MSCI Asia Pacific Index slipped 0.3 percent at 1:54 p.m. in Tokyo, after advancing 0.5 percent last week. Japan’s Topix dropped 0.9 percent, retreating for a third day, with exporters and banks having the biggest impact.

Hong Kong’s Hang Seng rose 0.1 percent, trading just below 24,000, and the Shanghai Composite Index lost 0.3 percent. China’s economy remained generally steady during the Lunar New Year while sentiment readings show uncertainties over the outlook, according to the earliest private data for February.

The S&P/ASX 200 Index dropped 0.3 percent in Sydney while New Zealand’s S&P/NZX 50 rose 0.3 percent.

Futures on the S&P 500 added 0.2 percent. The Dow Jones Industrial Average closed at another record on Friday, gaining for an 11th day. The Stoxx Europe 600 Index ended flat last week after falling for three straight sessions.

Currencies

The yen was down less than 0.1 percent to 112.20 per dollar, after swinging between gains and losses of 0.2 percent. The currency jumped 1.4 percent over the previous three days.

The Bloomberg Dollar Spot Index was little changed. The gauge fell 0.4 percent last week, its first drop in three weeks.

The British pound lost 0.3 percent after the Times of London reported that U.K. Prime Minister Theresa May is preparing for Scotland to potentially call for an independence referendum in March. The currency tumbled 0.8 percent on Friday.

Commodities

WTO crude futures rose 0.4 percent to $54.21 a barrel after falling 0.8 percent on Friday.

Gold slipped less than 0.1 percent to $1,256.60 an ounce. The metal jumped 1.8 percent last week for its fourth straight weekly advanced.

Iron ore jumped 4 percent after retreating last week.

Bonds

Yields on 10-year Treasuries added two basis point to 2.33 percent, rising after three straight days of declines.

Australia’s 10-year yields slipped three basis points to 2.70 percent.