Asian markets cautious as everything rides on dovish Powell

SYDNEY -- Asian shares inched ahead on Wednesday while higher Treasury yields lifted the dollar as markets wondered if the world's most powerful central banker would confirm or confound expectations for US policy easing this month.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.2 percent, after 3 sessions of losses.

South Korea climbed 0.6 percent, but Japan's Nikkei lagged with a loss of 0.15 percent. E-Mini futures for the S&P 500 added a slim 0.08 percent.

Federal Reserve Chair Jerome Powell testifies before the US Congress on Wednesday and Thursday and investors have a lot riding on him sounding suitably dovish.

Futures are still fully priced for a 25-basis-point cut at the Fed's July 30-31 meeting, but have abandoned wagers on a half-point move. They had implied a 25 percent probability of an aggressive cut before Friday's upbeat jobs report.

"We still think the odds favor of a 25 bps "insurance" cut," said Kevin Cummins, a senior US economist at NatWest Markets.

"The Fed's consideration of rate cuts is not only about growth but also about inflation, which remains well below target, and inflation expectations, which were breaking to the downside before the Fed signaled the likelihood of cuts."

Overnight, Atlanta Fed bank president Raphael Bostic let nothing out of the bag by saying the central bank was debating the risks and benefits of letting the US economy run "a little hotter."

Lurking in the background, US and Chinese trade officials held "constructive" talks on trade by phone on Tuesday, White House economic adviser Larry Kudlow said.

Wall Street had been dully circumspect, with the Dow ending Tuesday down 0.08 percent, while the S&P 500 added 0.12 percent and the Nasdaq 0.54 percent.

MORE YIELD

The cooling in US rate fever has seen bonds give back just a little of their huge rally, with yields on two-year Treasuries rising to 1.909 percent from the recent trough of 1.696 percent.

That in turn has helped the dollar bounce on a basket of currencies to 97.537 from a June low of 95.843.

The dollar also firmed to 108.96 yen, while the euro faded to $1.1204 having been as high as $1.1412 just a couple of weeks ago.

The Mexican peso was nursing a few bruises after sliding on Tuesday when the country's moderate Finance Minister Carlos Urzua suddenly resigned, citing "extremism" in economic policy.

The Canadian dollar was on the defensive ahead of a rate meeting by the Bank of Canada in case policy makers tried to slow the currency's recent rally.

The dollar's gains took the shine off gold, which eased 0.3 percent to $1,393.14 per ounce.

Oil prices were supported by Middle East tensions and OPEC supply cuts.

Brent crude futures rose 67 cents to $64.83, while US crude gained 83 cents to $58.66 a barrel.

source: news.abs-cbn.com

Dow, S&P 500 end week at records; dollar tumbles

NEW YORK - Wall Street stocks finished at fresh records Friday following solid bank earnings, while the dollar retreated after lackluster US data raised questions about additional Federal Reserve rate hikes.

The Dow and S&P 500 ended at fresh records in anticipation that teh positive bank results foreshadow a generally strong earnings period. The records, the third in a row for the Dow, capped a strong week for US stocks that some analysts attributed to commentary from Fed Chief Janet Yellen that was more dovish than expected.

Equity markets elsewhere were mixed, with London and Frankfurt down, Tokyo up and Paris flat.

JPMorgan Chase, Citigroup and Wells Fargo all reported higher earnings than expected by Wall Street analysts, showing the benefits of higher US interest rates, despite a drop in revenue from trading divisions.

However, share prices for all three banks fell, with JPMorgan losing 0.9 percent, Citigroup 0.4 percent and Wells Fargo 1.1 percent.

"The fact that the banks started off the earnings season with very good earnings will bode well," said Bill Lynch, director of investment at Hinsdale Associates.

"Most strategists expect the season to be a good one with earnings going up at least six percent, maybe as much as nine percent."

On foreign exchanges, the dollar struggled after disappointing US inflation and retail sales data for June, falling against the pound and the euro.

"The morning's data, particularly the cooler than expected CPI figures, seem to justify Fed Chair Janet Yellen's more cautious tone this week in her Congressional testimony," said Omer Esiner, analyst at Commonwealth Foreign Exchange.

"The lack of meaningful evidence of a strong rebound in the economy in the second half of this year could continue to keep the dollar pressured."

Oil prices rose for the fifth straight day amid signs of greater balance between supply and demand.

KEY FIGURES AROUND 2100 GMT

New York - DOW: UP 0.4 percent at 21,637.74 (close)
New York - S&P 500: UP 0.5 percent at 2,459.27 (close)
New York - Nasdaq: UP 0.6 percent at 6,312.47 (close)
London - FTSE 100: DOWN 0.5 percent at 7,378.39 (close)
Frankfurt - DAX 30: DOWN 0.1 percent at 12,631.72 (close)
Paris - CAC 40: FLAT at 5,235.31 (close)
Tokyo - Nikkei 225: UP 0.1 percent at 20,118.86 (close)
Hong Kong - Hang Seng: UP 0.2 percent at 26,389.23 (close)
Shanghai - Composite: UP 0.1 percent at 3,222.42 (close)
Euro/dollar: UP at $1.1470 from $1.1400
Pound/dollar: UP at $1.3111 from $1.2942
Dollar/yen: UP at 112.50 yen from 112.34 yen
Oil - Brent North Sea: UP 49 cents at $48.91 per barrel
Oil - West Texas Intermediate: UP 46 cents at $46.54 per barrel

source: news.abs-cbn.com