Stocks, Currencies Mixed Ahead of Fed; Oil Slumps

EghtesadOnline: Asian equities were mixed, with solid gains in Australia and New Zealand offset by China, where markets weakened despite data showing resilience in retail sales and industrial output. The dollar held declines and Treasuries edged higher ahead of the Federal Reserve’s policy decision.

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14 June 2017

South Korea’s benchmark gave up earlier gains that came on the back of U.S. stocks climbing to all-time highs as technology stocks rebounded. Economic data from China were largely in line with forecasts, but stocks slipped on concerns regulators will place further curbs on insurers’ investments. The yen was little changed, while sterling fell after rising for the first time since the U.K. election. Oil also resumed its decline as industry data showed U.S. crude stockpiles expanded, exacerbating an inventory overhang, Bloomberg reported.

A rebound in tech shares on Tuesday in Asia carried through to U.S. trading, restoring what had been a key driver for global equity gains. Drama in Washington continued to demand attention, with U.S. Attorney General Jeff Sessions testifying to lawmakers that he never spoke with Russian officials concerning “any type of interference” with the 2016 presidential campaign. He declined to comment on conversations he had with President Donald Trump, saying that to do so would potentially deny the president the right to claim executive privilege.

Here are the key events investors will be watching this week:

Fed policy makers are expected to raise their benchmark interest rate for the second time this year on Wednesday. Since that’s widely anticipated, the more market-sensitive elements of the meeting will relate to signals on future policy -- either the path for rates or plans to cut the $4.5 trillion balance sheet.

Central banks in Japan, Switzerland and Britain are also scheduled to weigh in with policy decisions this week.

China retail sales rose 10.7 percent year-on-year in May, in line with forecasts, while industrial production was up 6.5 percent versus an expected 6.4 percent.

Japanese industrial production rose 5.7 percent in April from a year earlier and 4 percent month-on-month, matching estimates.

Westpac’s Australian consumer confidence index fell 1.8 percent to 96.2 for June. A report on the Australia jobs market is due Thursday.

South Korea reported unemployment dropped to 3.6 percent in May, below the most optimistic forecast, from 4 percent in April. New Zealand’s current-account deficit widened to 3.1 percent of the economy.

Here are the main moves in markets:

Stocks

The Topix Index was up 0.1 percent at 1:37 p.m. Tokyo time, heading for its highest close in a week.

The Shanghai Composite Index was down 0.6 percent, while the CSI 300 Index dropped 1%, its biggest intraday loss in three weeks. The Hang Seng Index fell 0.3 percent and the Kospi Index in South Korea was off 0.2 percent. The MSCI Asia Pacific ex-Japan lost 0.1 percent.

Australian equities advanced for a fourth day, climbing 0.8 percent. The S&P ASX 200 Index is at its highest in nearly a month. New Zealand shares rose 0.1 percent.

Futures for the S&P 500, which added 0.5 percent Tuesday, were down 0.1 percent. The Nasdaq 100 climbed 0.8 percent Tuesday, rebounding from its worst two-day drop of the year.

Currencies

The pound was down 0.1 percent at $1.2746 after it strengthened 0.8 percent Tuesday, spurred by data showing U.K. inflation resumed its upward march last month.

The Canadian dollar was the biggest mover, rising for a fifth day. It was up 0.2 percent.

The Bloomberg Dollar Spot Index held Tuesday’s 0.2 percent retreat. The yen was unchanged at 110.06 per dollar.

The Aussie dollar gained 0.1 percent to 0.7544 U.S. cents. South Korea’s won, Asia’s strongest currency this year, gained 0.2 percent to 1.126.35 per dollar.

Bonds

The yield on 10-year Treasuries was down one basis point at 2.20 percent.

Australian 10-year notes were steady, with the yield at 2.40 percent.

Commodities

West Texas crude futures slumped 1 percent to $46 a barrel. U.S. inventories climbed by 2.75 million barrels last week, the American Petroleum Institute was said to report.

Iron-ore futures in Dalian reversed earlier losses to climb 1.6 percent to 425 yuan a ton following the stable Chinese economic data.