Asian markets mostly down as virus fears grow

HONG KONG - Asian markets fell Monday following a steep drop on Wall Street as the jubilation from last week's enormous US stimulus package faded and investors returned their attention to the soaring infection and death rate of the coronavirus.

Donald Trump finally signed off the more than $2 trillion pump-priming measures on Friday, but equities -- which enjoyed a rally for much of the week -- ended on a negative note as dealers took profits.

While the disease ravages populations and the global economy grinds to a halt with 40 percent of the planet in lockdown, experts are struggling to get a grip on the scale of the crisis that is forecast to cause a worldwide recession.

And analysts say there are likely more dark days ahead, with Trump abandoning his timetable for life returning to normal in the United States and extending emergency restrictions for another month.

The president said he expected the country to "be well on our way to recovery" by June 1 -- dropping his previous target of mid-April.

Meanwhile, senior US scientist Anthony Fauci issued a tentative prediction that COVID-19 could claim up to 200,000 lives in the US.

Governments and central banks have acted to shore up the global economy, pledging around $5 trillion in stimulus support, with China on Monday joining the party by lowering bank borrowing costs and pumping billions of dollars into financial markets, while Singapore also eased rates.

AxiCorp's Stephen Innes said markets looked like they were "nearing policy fatigue where it becomes less effective, and as the surprise element diminishes, no one cares".

"So, while policy responses in the US and Europe have been spectacular... the coronavirus keeps spreading globally, deepening fears of the economic and financial impact across countries. More market turmoil likely lies ahead."

He also pointed out that with the corporate reporting season approaching "now we are about to enter a vortex of bad earnings, bad economic data, and bankruptcies."

THE BIG UNKNOWN

The downbeat mood weighed on Asian equities, though most pared their morning losses. Tokyo and Hong Kong ended more than one percent down, while Shanghai was off 0.9 percent. Mumbai and Manila lost more than two percent, while Taipei slipped 0.7 percent.

Seoul was flat, while there were also losses in Bangkok and Jakarta.

Singapore slid more than four percent as investors brushed off the city-state's monetary policy easing measures that came days after data showed it was heading for a deep recession.

However, Sydney soared seven percent in its best one-day performance ever following a more than five percent slide Friday. Traders also were buoyed by data pointing to a slowdown in new infections in Australia as well as an $80 billion economic government support package that was unveiled after markets closed but was widely expected.

In early trade, London and Paris each lost around 2.8 percent while Frankfurt was down 1.6 percent.

"The big question for markets is whether the huge stimulus introduced so far across the globe will be enough to help the global economy withstand the economic shock from the COVID-19 containment measures," said National Australia Bank's Rodrigo Catril.

"To answer this question one needs to know the magnitude of the containment measures and for how long they will be implemented. This is the big unknown and it suggests markets are likely to remain volatile until this uncertainty is resolved."

The return to a risk-averse environment on trading floors also sent the dollar back up against higher-yielding currencies with the Mexican peso, Indonesian rupiah and South Korean won losing more than one percent apiece.

The South African rand plunged more than two percent to a record low after Moody's slashed its credit rating on the country to below investment grade.

Crude plunged with the market remaining in turmoil, with the Saudi-Russian price war adding to the impact of battered demand caused by the virus. And there are warnings the commodity, already at near two-decade lows, could sink even further as production remains heightened and storage tanks around the world approach full capacity.

"When the storage capacity is filled, we should probably expect a response from Saudi Arabia, Russia, and other essential oil producers," Innes added, though he warned "the longer their response takes, the higher the risk of another steep decline in oil prices".

source: news.abs-cbn.com

Asia stocks firm as Fed props up rate cut expectations

TOKYO -- Asian stocks advanced on Friday after a top Federal Reserve official cemented expectations of a US interest rate cut later this month, fueling appetite for riskier assets and keeping a cap on the dollar.

New York Fed President John Williams said on Thursday that policymakers could not wait for economic disaster to hit before adding stimulus, in a speech read as a strong argument in favor of quick monetary action.

In oil markets, crude surged after the United States said its navy destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows, raising concerns about supply disruptions out of the region.

The comments by Williams made it a virtual certainty the Fed would cut interest rates by 25 basis points at its July 30-31 policy meeting and also fueled expectations of an even deeper 50 basis point reduction.

Financial markets quickly reacted, with Fed fund rate futures at one point pricing in almost 70 percent chance of a 50 bp cut at the month-end meeting. The odds eased to around 40 percent after the New York Fed clarified that Williams' speech was not about immediate policy direction.

Wall Street shares shook off a sluggish start and moved higher overnight thanks to Williams' dovish comments.

The Shanghai Composite Index and Hong Kong's Hang Seng were both up 1 percent.

Australian stocks added 0.7 percent, South Korea's KOSPI rose 1 percent and Japan's Nikkei advanced 1.65 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 1 percent, bouncing back from the previous day's losses.

Over the week, the index has climbed a modest 1 percent, as riskier assets were partly capped by US President Donald Trump's reiteration of his threat to impose further duties on Chinese imports. The two sides resumed talks recently to seek an end to a year-long trade war that has rattled financial markets and slowed global growth.

"Dovish Fed policy expectations do provide support for the equity markets, which are set to rebound after suffering losses the previous day," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management. "But factors such as US-China trade issues and tensions over Iran are likely to limit the markets' gains."

The dollar index against a basket of six major currencies stood little changed at 96.787 after losing roughly 0.5 percent overnight to a two-week low of 96.671 in the wake of comments from the Fed's Williams.

The greenback was up 0.2 percent at 107.520 yen, crawling away from a three-week trough of 107.210 on Thursday after the New York Fed's clarification of Williams' comments. The currency had previously lost 0.6 percent against its Japanese peer.

The euro was 0.1 percent lower at $1.1267 after climbing 0.45 percent the previous day.

US Treasury yields were lower across the board in light of Williams' dovish views. The 2-year yield was at 1.7826 percent after touching a two-week low of 1.7520 percent. The 10-year yield declined to a 10-day trough of 2.023 percent and was last at 2.0363 percent.

In commodities, US crude oil futures reversed a large part of the previous day's deep losses, rising 1.8 percent to $56.34 per barrel.

Crude rallied after the reports the US Navy had destroyed the Iranian drone, clawing back earlier losses during the week. Oil prices had fallen on Thursday amid expectations that crude output would rise in the Gulf of Mexico following last week's hurricane in the region.

Spot gold extended the previous day's rally made on the prospects of lower US interest rates and brushed a six-year high of $1,452.60 an ounce, before pulling back a touch to $1,443.36. Middle East tensions also helped boost safe-haven gold.

source: news.abs-cbn.com

Asian shares edge up, trade, geopolitical tensions cap gains

TOKYO -- Asian stocks inched higher on Monday, with a rebound in the Hong Kong market helping the mood, as investors remained cautious ahead of a closely-watched Federal Reserve meeting.

But the simmering trade dispute between the United States and China as well as political tensions in the Middle East kept risk-appetite in check.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent, after opening slightly weaker. Japan's Nikkei average ticked up by a similar amount.

Asian markets got a quick boost after Hong Kong's Hang Seng Index jumped as much as 1.4 percent. At the weekend, the territory's leader Carrie Lam climbed down on a bill that would have allowed extradition to China.

The Hang Seng fell for three sessions in a row through Friday, after the extradition bill triggered mass protests and some of the worst unrest seen in the territory since Britain handed it back to Chinese rule in 1997.

"Last week the issue looked as if it would become another thorny point between the United States and China. As the bill is now being postponed indefinitely, things will likely calm down, which is good for markets," said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.

Mainland Chinese shares also firmed, with the benchmark Shanghai Composite up 0.2 percent and the blue-chip CSI 300 rising 0.2 percent.

US Secretary of State Mike Pompeo told Fox News on Sunday that President Donald Trump would raise the issue of Hong Kong's human rights with China's President Xi Jinping at a potential meeting of the two leaders at the G20 summit in Japan later this month.

Wall Street stocks ended lower on Friday as investors turned cautious before this week's Fed meeting, while a warning from Broadcom on slowing demand weighed on chipmakers and added to US-China trade worries.

Investors are waiting for more clues from the Fed after policymakers raised expectations for a rate cut in recent weeks.

Strong US retail sales data on Friday rolled back expectations of a Fed rate cut at this week's meeting to 21.7 percent, from 28.3 percent on Thursday, according to CME Group's FedWatch tool. But bets of an easing at the July meeting remain high at 85 percent.

"The week ahead is likely to provide some clarification for investors on three fronts that have been a source of uncertainty. The FOMC meeting, with updated forecasts, is center stage," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

A private gauge on eurozone's manufacturing sector as well as US-China trade frictions will also be watched closely, Chandler said.

Financial markets were sideswiped by a sudden escalation in Sino-US trade tensions in early May, with growing anxiety among investors that a protracted standoff could tip the global economy into recession.

Geopolitical tensions in the Middle East added another layer of uncertainty after the United States blamed Iran for attacks on two oil tankers in the Gulf of Oman last week.

Hopes that global central banks will keep the money spigots open have helped to temper some of the fears, and all eyes are on the Fed's two-day meeting starting on Tuesday.

The Bank of Japan also meets this week and is widely expected to reinforce its commitment to retain a massive stimulus program for some time to come.

The retail sales report also sent short-dated US Treasury yields higher, flattening the yield curve.

Benchmark 10-year notes was last at 2.091 percent, while two-year bond yield edged up, shrinking the spread between two- and 10-year yields to 23.6 basis points compared to more than 30 earlier this month.

A Reuters poll showed a growing number of economists expect the Fed policymakers to cut interest rates this year, although the majority still see it holding steady.

In currency markets, the dollar index against a basket of six major currencies climbed to 97.583 on Friday, its highest level in almost two weeks, after the US retail sales data eased fears that the world's largest economy is slowing sharply.

The index last stood at 97.488, while the euro fetched $1.1222, near the lower end of its weekly trading range.

Oil prices rose on Monday after US Secretary of State Pompeo said Washington will take all actions necessary to guarantee safe navigation in the Middle East, as tensions mounted following attacks on tankers last week.

Brent futures rose 0.4 percent to $62.24 a barrel, while US West Texas Intermediate (WTI) crude futures gained 0.3 percent to $52.66.

Spot gold was little changed at $1,341.48 an ounce after hitting a 14-month peak on Friday.

Bitcoin jumped overnight to $9,391.85, its highest level in 13 months. It was last quoted at $9,104.64.

source: news.abs-cbn.com

Chinese stocks jump at open after MSCI decision

SHANGHAI - Shanghai rose at the beginning of trade Wednesday after US-based index compiler MSCI agreed to include mainland-listed shares in its benchmark of emerging markets.

The benchmark Shanghai Composite Index rose 0.29 percent, or 8.98 points, to 3,148.99, bucking a regional retreat.

The Hang Seng index in Hong Kong fell 0.35 percent, or 90.77 points, to 25,752.27.

source: news.abs-cbn.com

Asia stocks fall in Wall Street's wake, dollar holds below 14-year peak

SINGAPORE - Asian stocks retreated in subdued trade on Friday after Wall Street took a breather from its surge since the U.S. election, while the dollar hovered below the 14-year high set earlier this week.

European markets look set to open flat to slightly lower, with financial spreadbetter IG Markets expecting Britain's FTSE 100 to open down 0.1 percent on a shortened trading day, and Germany's DAX and France's CAC 40 to start the day little changed.

MSCI's broadest index of Asia-Pacific shares outside Japan, fell 0.4 percent to a five-month low. It was heading for a drop of 1.8 percent in its second consecutive week of declines.

China's CSI 300 index dropped 0.7 percent, dragged lower by brokerage and insurance shares, on expectations regulators will tighten supervision over online insurance products. The index was on track to lose 1.1 percent for the week.

Hong Kong's Hang Seng retreated 0.5 percent, and was poised for a similar weekly loss.

Japan's Nikkei, closed for a holiday on Friday, edged up 0.1 percent for the week. The index has posted seven straight weeks of gains, its longest winning streak since early 2013, boosted by the yen's weakness in the face of a surging dollar.

Overnight, U.S. equities posted their first back-to-back daily declines of the month in light trading ahead of the Christmas weekend. U.S. indices fell as much as 0.4 percent on Thursday.

"Santa has taken a leave of absence into the end of the week," Jingyi Pan, market strategist at IG in Singapore, wrote in a note. "Asian indices could remain depressed into the end of the year."

Wall Street stocks have been on a tear since the U.S. election on expectations that Donald Trump's promised fiscal stimulus will boost economic growth and company profits. The Dow Jones Industrial Average has surged 8.7 percent since before the election results were announced.

Markets globally appeared be on pause for the holidays, with the MSCI World index down 0.1 percent on Thursday, and little changed on Friday.

Europe's STOXX 600 index closed down 0.2 percent on Thursday, with the broader downtrend offsetting expectations of a government bailout for troubled Italian lender Monte dei Paschi di Siena, which closed at a record low on Thursday.

Early on Friday, the Italian government approved a rescue of the world's oldest bank, after it failed to raise enough money from private investors to stay afloat.

Prime Minister Paolo Gentiloni told reporters his cabinet had authorised creation of a 20-billion-euro ($21 billion) fund to prop up Italy's embattled banking sector, with Monte dei Paschi expected to be first in line for help.

Deutsche Bank and Credit Suisse said separately on Friday they had agreed to deals of $7.2 billion and $5.3 billion respectively with the U.S. over their sales of mortgage securities in the run up to the 2008 financial crisis.

In the foreign exchange markets, the dollar was subdued, having scaled its highest point since December 2002 on Tuesday. It has since hovered below that level, with traders unwilling to make any big moves ahead of the holiday weekend.

The dollar index, which tracks the greenback against a basket of six global peers, slipped 0.1 percent to 102.98, down from Tuesday's 103.65 peak. It is poised to end the week flat.

The dollar inched down 0.2 percent against the yen to 117.355, and was on track for a 0.55 percent loss for the week.

Still, most traders retain positive bets on the U.S. currency, particularly after upbeat economic data including business spending, and an upward revision to third-quarter economic growth on Thursday.

"The trend is definitely for a stronger dollar," Stephen Casey, senior currency trader at Cambridge Global Payments in New York. "Any dip in the dollar will a buying opportunity."

The euro edged up 0.2 percent to $1.0453 on Friday, on track for a flat end to the week.

Sterling was little changed at $1.229, on track for a weekly slide of 1.6 percent.

The muted investor sentiment weighed on the Australian dollar AUD=, which dropped 0.1 percent to $0.7207, fractionally above a seven-month low touched Thursday and repeated Friday.

Oil prices slipped as investors took profits after Thursday's gains driven by strong U.S. economic data and optimism that crude producers would keep to their pledge to limit output.

U.S. crude pulled back 0.5 percent to $52.69 a barrel on Friday, but remains on track for a 1.5 percent gain for the week.

Global benchmark Brent crude fell 0.4 percent to $54.85, set to close the week 0.7 percent lower.

As risk appetite ebbed on Friday, the decline in gold prices, which have languished in the wake of the dollar's rally, reversed. Spot gold climbed 0.3 percent to $1,131.79 an ounce, shrinking its weekly loss to 0.2 percent.

source: news.abs-cbn.com

Most Asia stocks slide on Fed officials' rate comments, dollar firms

SINGAPORE - Most Asian share markets tumbled on Monday while the U.S. dollar added to gains made after Federal Reserve Chair Janet Yellen indicated a U.S. interest rate increase remains on the cards for this year.

European markets also looked set for a weak start, with financial spread betters expecting Germany's DAX to open down 0.7 percent, and the blue-chip Euro Stoxx 50 to begin the day 0.6 percent lower. British markets are closed for a holiday.

MSCI's broadest index of Asia-Pacific shares outside Japan extended losses to 1 percent.

Japan's Nikkei bucked the trend, closing 2.3 percent higher, the biggest one-day gain in three weeks, as the yen weakened against the resurgent dollar.

China's CSI 300 index and the Shanghai Composite slipped 0.2 percent. Hong Kong's Hang Seng shed 0.4 percent.

The case for a U.S. rate hike has strengthened in recent months, with a lot of new jobs being created, and economic growth looks likely to continue at a moderate pace, Yellen said in a speech at the Fed's annual monetary policy conference in Jackson Hole, Wyoming, on Friday.

While Yellen did not give guidance on what the central bank needs to see before raising rates, she said the Fed already thinks it is close to meeting its goals of maximum employment and stable prices. She described consumer spending as "solid" but noted that U.S. business investment was weak and exports hurt by a strong dollar.

Comments by the Fed's No. 2 policymaker, Vice Chair Stanley Fischer, following Yellen's speech also bolstered the case for a hike this year.

Asked on CNBC whether a rate hike in September and more than one policy tightening before year-end should be expected, Fischer said Yellen's comments were "consistent with answering yes" to both questions, albeit still data-dependent.

Among the first data to be scrutinized will be U.S. consumer confidence for August, due on Tuesday; productivity, manufacturing and construction figures on Thursday; and August non-farm payrolls data rounding out the week on Friday.

Global factory activity surveys will also be released on Thursday.

Traders have modestly raised expectations for U.S. rate increases this year, but remain cautious.

The odds of a hike in September rose to 33 percent following the comments, from 21 percent on Thursday, according to CME Group's FedWatch tool. Traders were pricing in a 59.1 percent chance of a hike in December, up from 51.8 percent on Thursday.

"While the move toward another Fed rate hike will likely cause bouts of consternation in investment markets I don’t see the same degree of uncertainty that we saw around last year’s Fed rate hike," Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

"It's clear from the Fed's actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blow back to the U.S. economy and of the impact of a rising U.S. dollar in doing some of its work for it."

The comments from Yellen and Fischer dragged Wall Street lower at the close.

But they proved a boon for the U.S. currency, with the dollar index, which tracks the greenback against six global peers, jumping 0.8 percent on Friday. It held steady at 95.552 on Monday.

The dollar rose 0.5 percent to a two-week high of 102.34 yen on Monday. That followed gains of 1.3 percent on Friday, its biggest one-day advance in almost seven weeks.

Japanese household spending and retail sales data for July are due on Tuesday. Investors are seeking some sign that Prime Minister Shinzo Abe's massive stimulus programs are having an effect, after figures on Friday showed a decline in consumer prices by the most in three years in July.

The euro was flat at $1.120 after tumbling 0.8 percent on Friday, its biggest one-day slide since July 15.

In commodities, crude prices retreated on the rally in the dollar and concerns about growing output after exports from Iraq in August exceeded July levels.

Iran also said late last week that it would only cooperate in upcoming producer talks in September if other exporters recognized Tehran's right to regain market share lost during international sanctions that were only lifted in January.

U.S. crude futures dropped 1.5 percent to $46.95.

Global benchmark Brent crude retreated 1.2 percent to $49.31.

The stronger dollar also weighed on gold. Spot gold slipped 0.2 percent to $1,318.10, after earlier touching a five-week low.

source: www.abs-cbnnews.com