Caution Prevails for Asia Stocks Amid Metals Slump: Markets Wrap – 23 Feb, 2017
Asian stocks took on a muted tone at the end of a positive week as falling metals prices pulled down shares of raw-materials companies. The yen retreated from a two-day advance.
The dollar regained some ground against most major currencies after weakening Thursday on Treasury Secretary Steven Mnuchin’s statement that fiscal stimulus effects on the economy this year may be limited. Tokyo shares pared earlier losses as the yen weakened. Commodity producers dragged Australian equities lower after iron ore tumbled. Gold headed for a fourth weekly increase and oil was poised for its best week of the year.
A fifth weekly gain for Asian shares that’s helped push the value of global equities above $70 trillion is losing momentum as money managers grapple with political uncertainty and the Federal Reserve’s schedule for lifting borrowing costs. Fed Bank of Dallas President Robert Kaplan urged his colleagues at the U.S. central bank to seize opportunities to raise interest rates, even as he said they should keep their options open ahead of next month’s policy meeting.
“There are those out there thinking, ‘Well, markets have had such a big runup, it’s time to take a bit of money off the table,”’ said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which managed about $120 billion as of December 2016. “It wouldn’t surprise me to see a bit of consolidation or correction, and maybe we’re starting to see signs of that.”
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What are traders are watching for:
- Investors will be watching for any policy details when Trump addresses Congress next week.
- Billionaire Warren Buffett releases his annual letter to shareholders with Berkshire Hathaway Inc.’s earnings over the weekend.
- Legislators in the U.K. will consider changes to the Brexit bill next Monday and Wednesday that may address the rights of EU citizens in Britain and give parliament a binding vote on the final deal.
Here are the main moves in markets:
Currencies
- The yen dropped 0.2 percent to 112.83 per dollar as of 12:16 p.m. in Tokyo, after rising 0.6 percent Thursday. The currency is flat for the week.
- The Bloomberg Dollar Spot Index rose less than 0.1 percent after falling 0.3 percent in the previous session.
- The Australian dollar slipped 0.1 percent. Central bank Governor Philip Lowe said he expects “a period of stability” in interest rates and suggested further cuts could push already high household debt to “dangerous” levels.
Stocks
- The MSCI Asia Pacific Index fell 0.4 percent, paring this week’s advance to 0.7 percent. Japan’s Topix index fell 0.1 percent, after sliding 0.7 percent at the start of trading. The gauge is up 0.7 percent for the week.
- Australia’s S&P/ASX 200 Index retreated 0.7 percent. BHP Billiton is on course to decline 5.6 percent this week, the biggest loss since December.
- Hong Kong’s Hang Seng dropped 0.4 percent, retreating for a second day after reaching the highest since August 2015. The Hang Seng Enterprises Index lost 0.7 percent.
- Futures on the S&P 500 fell 0.1 percent. The index rose less than 0.1 percent on Thursday, while the Dow posted a 10th day of gains, its longest streak of record closes since 1987. The Stoxx Europe 600 index slipped 0.1 percent.
- Baidu Inc. surged in after-hours trading in New York as profit topped estimates.
Commodities
- Gold was little changed at $1,249.63 an ounce after rising 1 percent on Thursday. The metal is up 1.2 percent for the week, heading for the highest closing level since November.
- Iron ore tumbled 5 percent, and is poised for a weekly loss. After a surprise rally last year, the commodity roared into 2017 on optimism that Chinese demand would prove robust. This week has seen a series of warnings the gains may be overextended.
- Copper, aluminum and zinc were little changed, with declines amounting to at least 0.7 percent for the week.
- Oil slipped 0.2 percent to $54.32, after jumping 1.6 percent in the previous session as government data showed a smaller-than-expected increase in crude inventories. Crude is trading near the highest level since July 2015.
Bonds
- Yields on 10-year Treasuries were little changed at 2.38 percent, after dropping four basis points on Thursday.
- Australia 10-year yields fell six basis points to 2.73 percent.
Source: Bloomberg