Asia Shares Slump Before Data, Summit; Yen Climbs

EghtesadOnline: Asian equities slipped as investors awaited more clues on U.S. interest rates and economic growth, ahead of a meeting between Donald Trump and China’s Xi Jinping. Stocks in Shanghai rallied and the yen strengthened.

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05 April 2017

Japanese shares dropped as the yen climbed for a fourth day. Stocks in Shanghai and Taiwan rallied after markets reopened after a holiday. South Africa’s rand steadied after a pronounced slump. The Aussie recouped some of its declines triggered by a warning from the central bank that regulators are prepared to consider further measures to tame runaway house-price growth. Oil extended Tuesday’s advance, Bloomberg reported.

Improving economic data has helped fuel gains that pushed global stocks to a record last month, leaving money managers assessing the scope for the rally to continue. The monthly U.S. jobs report comes at the end of a week that saw American automakers report disappointing sales. Stocks are becoming expensive relative to historical valuations, but they remain cheaper than bonds based on earnings and interest rates, according to Bloomberg Intelligence Equity Strategists Gina Martin Adams and Peter Chung.

“There are a lot of concerns out there. The key is the outcome of the Trump-Xi meeting,” Andrew Sullivan, managing director for sales trading at Haitong International Securities Group Ltd. in Hong Kong, said by phone. “The U.S. jobs report on Friday and the outlook for U.S. interest rates is also weighing on the market, together with the Fed minutes from the last meeting. I think a lot of traders are risk-off.”

The TV debate between French presidential hopefuls extended beyond four hours on Tuesday night, covering topics from the nation’s debt to ethics. The upcoming election is seen as a barometer for the strength of populist politics.

Upcoming events of note for investors:

U.S. central speakers include William Dudley, president of the New York Fed, and Governor Daniel Tarullo. Minutes from the March meeting, which are scheduled to be released Wednesday, should put their recent public comments into perspective. Minutes are also due from the European Central Bank’s latest gathering.

China’s President Xi Jinping will meet U.S. President Donald Trump for two days starting Thursday.

U.S. non-farm payrolls are due Friday.

Here are the major moves in markets:

Stocks

The MSCI Asia Pacific Index declined 0.2 percent as of 12:59 p.m. in Tokyo. The Topix index lost 0.4 percent, erasing an earlier gain of 0.6 percent. The gauge closed at the lowest level since Dec. 7 on Tuesday.

Australia’s S&P/ASX 200 Index slipped 0.1 percent. South Korea’s Kospi index fell 0.6 percent. Hong Kong’s Hang Seng lost 0.2 percent.

The Shanghai Composite rose 1.1 percent, while Taiwan’s Taiex advanced 0.8 percent.

Futures on the S&P 500 Index dropped 0.1 percent. The underlying gauge advanced 0.1 percent on Tuesday and the Dow Jones Industrial Average rose 0.2 percent. The Stoxx Europe 600 Index added 0.2 percent.

Currencies

The yen rose 0.1 percent to 110.64 per dollar, climbing for a fourth straight day.

The Bloomberg Dollar Spot Index fell 0.1 percent, after a two-day gain.

The South African rand held on to Tuesday’s gain. Moody’s Investors Service postponed a review of the country’s credit rating after S&P Global cut its rating to junk amid a cabinet purge by President Jacob Zuma.

Bonds

The yield on 10-year Treasury notes fell one basis point to 2.35 percent, after rising four basis points on Tuesday.

Australian 10-year yields were flat at 2.60 percent after dropping seven basis points on Tuesday.

Commodities

Oil climbed 0.6 percent to $51.31 a barrel, adding to Tuesday’s advance which was the highest close for crude since March 7.

Gold was little changed at $1,255.38 an ounce, after a three-day advance.