Dollar Strengthens While Most Asian Equities Climb: Markets Wrap – 20 Feb, 2017
Investors backed away from haven assets as the dollar strengthened with Asian equities while gold fell.
The U.S. currency advanced against its major peers after a Federal Reserve official said a March interest rate hike is not off the table. The pound was the strongest among G-10 currencies as a debate among British lawmakers on Brexit headed into a second day. Traders are awaiting earnings from HSBC Holdings Plc and BHP Billiton Ltd. after a U.S. holiday damped activity on Monday.
Global equities are trading near a record high after Trump’s election spurred optimism in economic growth amid signs of an inflation pickup. Yet caution remains in the markets. The dollar has fallen from the highs at the start of 2017 as investors clamored for detail on U.S. spending plans under the new administration. Japan’s Topix index, meanwhile, has stagnated after reaching a peak at the start of the year, trading within a range of about three percentage points over the past 49 days — the narrowest since 1988.
The dollar strengthened as Market News International cited Fed Bank of Philadelphia President Patrick Harker saying in an interview Friday that “I don’t think we’re behind the curve right now” and that a rate move next month is not “off the table at this point.”
HSBC is the first of the largest U.K. banks to report results this week, while Australia’s BHP is forecast to post a seven-fold increase in first-half earnings. The U.K. House of Lords began debating the draft law that would allow Prime Minister Theresa May to trigger Britain’s departure from the European Union, with some members seeking to make changes that opposition lawmakers failed to secure in the lower House of Commons.
Marine Le Pen gained ground on her rivals for the French election, polls showed, pushing out the spread between 10-year French debt and German bunds.
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Here’s what’s coming up that may influence investor decision:
- The Fed releases minutes this week from its most recent meeting, possibly giving investors a look into how members see Trump’s policies. Data should show the U.S. housing market perking up at the start of the year. The PMI is expected to rise slightly.
- PMI surveys for the euro area and its two largest economies this week may show growth momentum is solid, while the Ifo business confidence survey may support that view for Germany.
- Bank of England Governor Mark Carney will on Tuesday testify before the U.K. Parliament’s Treasury Committee.
Here are the main moves in markets:
- The Bloomberg Dollar Spot Index rose 0.2 percent as of 10:24 a.m. in Tokyo.
- The yen fell 0.3 percent to 113.47 per dollar, after declining 0.2 percent Monday. The Aussie slipped 0.3 percent to 76.69 U.S. cents after a 0.3 percent advance on Monday.
- The Topix index added 0.3 percent, rising for a second day. South Korea’s Kospi index climbed 0.8 percent to the highest level since July 2015. Australia’s S&P/ASX 200 Index fell 0.1 percent.
- Hong Kong’s Hang Seng added 0.1 percent and the Shanghai Composite Index was little changed.
- The Stoxx Europe 600 Index closed 0.2 percent higher on Monday. Shares in Unilever fell 5.1 percent after the withdrawal of Kraft Heinz Co.’s$143 billion takeover bid.
- The yield on 10-year Treasuries advanced two basis points to 2.44 percent. Australian 10-year yields rose two basis point to 2.81 percent.
- Gold dropped 0.4 percent to $1,234.01 an ounce. The metal has alternated between gains and losses over the past four sessions.
Source: Bloomberg