Asian Stocks Rise, Dollar Firm Before Trump Speech: Markets Wrap – 27 Feb, 2017
Asian stocks rose, with Japanese shares receiving support from a drop in the yen overnight, while the dollar maintained gains ahead of Donald Trump’s address to Congress. Crude remained above $54 a barrel.
Japan’s Topix index rebounded after the Dow Jones Industrial Average pushed its winning streak to 12 sessions, the longest in 30 years. Gains in Australia and South Korea were more muted. The dollar strengthened as the Trump administration began outlining spending priorities ahead of the president’s speech Tuesday.
Fed Bank of Dallas President Robert Kaplan said policy makers should raise interest rates “sooner rather than later” and not pay excessive attention to market expectations. The chance of a rate hike at the Fed’s March 14-15 meeting on Monday jumped to 50 percent, federal funds futures showed, from 34 percent just five days ago.
“Dollar bears should take caution if Trump follows through on infrastructure and Yellen ratchets up the rate-hike rhetoric to end the week,” said Stephen Innes, senior currencies trader in the Asia Pacific at Oanda Corp. “The big question for the market is, will Trump use tonight’s platform to execute?”
While U.S. stock markets hit new highs, the rally in global equities that helped push their value above $70 trillion is stalling as investors grapple with political uncertainty and the Fed’s schedule for lifting borrowing costs. Trump on Monday said he’d spend “big” on infrastructure, while adding that tax details won’t become clear until after the costs of repealing the Affordable Care Act are known.
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What’s coming up this week:
- In Trump’s address before a joint session of Congress on Tuesday night in the U.S., the president is expected to lay out plans for tax and health-care reform and infrastructure spending.
- Fed officials are due to make speeches, including Chair Janet Yellen who addresses 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.
Here are the main moves in markets:
Currencies
- The yen added 0.1 percent to 112.58 per dollar as of 11:44 a.m. in Tokyo, after sliding 0.5 percent to end a three-day winning streak.
- The Aussie climbed 0.1 percent to 76.79 U.S. cents ahead of Wednesday’s GDP report.
- The Bloomberg Dollar Spot Index was flat after a 0.1 percent advance on Monday.
Stocks
- The MSCI Asia Pacific Index climbed 0.2 percent, following two days of losses.
- The Topix index rose 0.9 percent, rebounding from Monday’s 1 percent decline. Australia’s S&P/ASX 200 Index and South Korea’s Kospi each increased 0.3 percent.
- Hong Kong’s Hang Seng fell 0.2 percent and the Shanghai Composite Index was little changed.
Bonds
- Yields on 10-year Treasuries slipped less than one basis point to 2.36 percent after rising five basis points Monday, reversing three straight days of declines.
- Australian benchmark yields added one basis point to 2.72 percent.
Commodities
- WTI crude futures edged up 0.1 percent after settling at $54.05 a barrel Monday, near the highest since July 2015.
- Iron ore futures on the Dalian Exchange fluctuated after Monday’s 2.7 percent jump.
Source: Bloomberg