A rally in Asian stocks faltered Thursday as investors weighed more signs of tension with U.S.-China relations and ongoing negotiations on an American stimulus package. The dollar dipped toward its lowest in almost two years.
Hong Kong shares saw the bulk of losses, with China and Japan modestly lower. Equities in South Korea and Australia outperformed. S&P 500 contracts edged up after the gauge rose to within 2% of its record closing high in the wake of encouraging news on the vaccine front. Ten-year Treasury yields were steady, while crude oil fluctuated. Gold remained above $2,000 an ounce. The offshore yuan touched a five-month high. The pound was steady ahead of the Bank of England decision that could pave the way for more stimulus.
Investors pushed a gauge of global stocks this week to within a whisker of recouping this year’s declines, as pressure grows on Republicans and Democrats to resolve differences over a new U.S. virus relief package. Meantime, U.S. Secretary of State Michael Pompeo urged American firms to bar Chinese applications from their app stores, the latest Trump administration attempt to counter China on multiple fronts.
The latest U.S. economic data was mixed, with payroll gains slowing sharply in July, suggesting the pickup in coronavirus cases is putting the brakes on the job market. Meanwhile, service industries expanded in July at the fastest pace since February 2019.
“There are some risks of the market relying too heavily on positive news around the fiscal stimulus and an earnings season that still wasn’t that great, even if many companies did beat,” Kerry Craig, global market strategist at JPMorgan Asset Management in Melbourne, said on Bloomberg TV. “There’s a case for markets, in the U.S. particularly, taking a pause from here on out rather than continuing this rally, given how strong it has been.”
U.S. Secretary of State Mike Pompeo is pushing a so-called “clean network initiative” which broadens the U.S. drive away from Chinese technology on all levels.
Source: Bloomberg
Here are some key events coming up:
- Reserve Bank of India and Bank of England rate decisions are due Thursday.
- Dallas Fed President Robert Kaplan discusses the U.S. economy at Thursday event.
- July U.S. jobs reports expected Friday.
These are some of the main moves in markets:
Stocks
- Futures on the S&P 500 Index rose 0.1% as of 12:41 p.m. in Tokyo. The gauge advanced 0.6% on Wednesday.
- Japan’s Topix index fell 0.4%.
- Hong Kong’s Hang Seng declined 1.6%.
- Shanghai Composite dipped 0.4%.
- South Korea’s Kospi index rose 1%.
- Euro Stoxx 50 futures lost 0.5%.
Currencies
- The Bloomberg Dollar Spot Index slipped 0.1%.
- The yen was at 105.53 per dollar.
- The offshore yuan held at 6.9449 per dollar.
- The euro bought $1.1871, up 0.1%.
Bonds
- The yield on 10-year Treasuries ticked down to 0.54%.
- Australia’s 10-year yield gained three basis points to 0.85%.
Commodities
- West Texas Intermediate crude declined 0.2% to $42.11 a barrel.
- Gold climbed 0.2% to $2,042.11 an ounce.
Source: Bloomberg