World stocks in third day of gains as Omicron fears ease

LONDON - A rebound in market sentiment continued in early European trading on Wednesday, with world shares set for their biggest two-day jump since November last year as investors became less concerned about the Omicron variant.

World shares plunged at the end of last month when the discovery of a new COVID-19 variant spooked investors. But sentiment has rebounded sharply this week in the absence of indications that the variant would derail the economic recovery.

The STOXX 600 had its biggest daily jump since November 2020 on Tuesday and, despite European stock index futures initially being in the red on Wednesday, at 0901 GMT the STOXX 600 was up 0.4 percent, set for its third consecutive day of gains.

The MSCI world equity index, which tracks shares in 50 countries, was up 0.2 percent - its highest since Nov. 26, when Omicron fears first hit markets.

"To be honest, it was more the absence of bad news rather than any concrete good news helping to drive sentiment," wrote Deutsche Bank strategist Jim Reid in a note to clients.

"Every day that passes without a wave of severe cases driven by Omicron is offering more hope that this won't be the curveball to throw the recovery off course."

British drugmaker GSK said on Tuesday its antibody-based COVID-19 therapy with US partner Vir Biotechnology was effective against all mutations of Omicron.

But a study in South Africa suggested that the Pfizer vaccine may only partly protect against Omicron.

"Clearly in the very short term uncertainty has risen over the Omicron virus... but overall at this stage we do not believe it will derail the macro picture in the medium-term," said Jeremy Gatto, multi-asset portfolio manager at Unigestion.

OUTLOOK FOR RATES

Oil prices eased as investors waited for more information about the extent to which the variant would impact demand. At 0911 GMT, Brent crude futures were down 0.4 percent and US West Texas Intermediate crude was down 0.5 percent on the day.

The dollar index was steady around 96.233, while the euro was up 0.1 percent at $1.1283.

The euro-dollar pair has struggled to recover from the 2021 lows it reached in November, hurt by expectations that the US Federal Reserve will tighten monetary policy more quickly than the dovish European Central Bank.

Last week, Fed Chair Jerome Powell said it might be time to stop seeing inflation as transitory, suggesting the central bank could speed up tapering.

"The market is pricing between two to three hikes next year now. We think that that pricing is too optimistic. We believe that the Fed will actually be slower to deliver on these rate hikes," said Unigestion's Gatto, adding that this would be supportive for equities.

The US 10-year Treasury yield, which had its biggest weekly drop since June 2020 last week due to a combination of Powell's hawkish comments and fears over Omicron, was a touch lower on Wednesday at 1.4597 percent.

US inflation data is due on Friday.

Meanwhile, shares in China's Evergrande Group hit a record low, after a missed debt payment deadline put the developer at risk of becoming the country's biggest defaulter - but the news had limited global market impact because it is already "well-priced" by the market, Unigestion's Gatto said.

In virtual talks, President Joe Biden warned Russian President Vladimir Putin that the West would impose "strong economic and other measures" on Russia if it invaded Ukraine, while Putin demanded guarantees that NATO would not expand farther eastward.

(Reporting by Elizabeth Howcroft; Editing by Alex Richardson)

-reuters- 

Bulls back in charge in global markets as omicron worries wane

LONDON - Waning Omicron COVID-19 variant worries and a timely booster shot of Chinese stimulus lifted world stock markets and oil on Tuesday and left traders offloading safe-haven currencies and bonds again.

The FTSEurofirst 300 index was on track for its first back-to-back run of plus 1 percent gains since February while Asia saw record bounces from some of China's biggest firms such as Alibaba and Baidu.

The risk-on mood also helped the dollar climb against safe haven currencies such as the Japanese yen,, which had lost 0.6 percent overnight, as the confidence-sensitive Australian dollar also found buyers.

Safe-harbour government bonds went the other way with yields - which move inverse to bond prices - up 2.5 percent on Germany's benchmark 10-year Bund after falling to a three-month low on Monday.

Reports in South Africa said Omicron cases there had only shown mild symptoms and the top US infectious disease official, Anthony Fauci, told CNN "it does not look like there's a great degree of severity" so far.

"Good news relating to the severity of Omicron should be taken with a pinch of salt. Faster transmission could offset the benefits of milder symptoms," researchers at ING said in a note. "More broadly, it is still early days, even if markets are starting to display Omicron fatigue."

The gains also came after China's central bank on Monday injected its second shot of stimulus since July by cutting the amount of cash that banks must hold in reserve.

There was still uncertainty about its property sector as Evergrande teetered on the brink of default again but data showing much stronger import growth was "a positive sign on the strength of domestic demand", RBC analyst Adam Cole said.

Elsewhere, Australia's S&P/ASX200 rose 0.95 percent, while Japan's Nikkei advanced 2.1 percent as risk-on sentiment pushed markets higher.

MSCI's main Asia ex-Japan benchmark has lost about 5 percent so far this year, with Hong Kong markets figuring among the big losers, while Indian and Taiwan stocks outperformed.

Shares in embattled developer Evergrande edged up 1.7 percent after hitting a record low on Monday as markets waited to see if the real estate giant has paid $82.5 million with a 30-day grace period coming to an end.

Elsewhere, markets were supported by gains on Wall Street, where economically sensitive stocks outperformed.

"While epidemiologists have rightly warned against premature conclusions on Omicron, markets arguably surmised that last week's brutal sell-off ought to have been milder," Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note.

"After all, early assessments of Omicron cases have been declared mild, spurring half-full relief."

Also supporting the dollar in FX markets was the expectation the Federal Reserve will accelerate the tapering of its bond-buying programme when it meets next week in response to a tightening labour market.

Oil prices jumped another 2 percent to $74.60 a barrel, adding to a near 5 percent rebound the day before as concerns about the impact of Omicron on global fuel demand eased.

Copper prices also ticked higher while gold was steady at $1,778.5 per ounce on expectations US consumer price data due later this week will show inflation quickening.

(Additional reporting by Anshuman Daga in Singapore; Editing by Nick Macfie)

-reuters-

Asian shares edge up; investors anxious over earnings, Brexit

SYDNEY -- Asian shares pulled ahead on Thursday with corporate earnings buffeting trading as investors remained anxious about the business impact of the Sino-US trade war while Brexit uncertainties kept overall sentiment in check.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent with Japan's Nikkei up 0.5 percent at a one-year high. Australian shares climbed 0.5 percent while South Korea's KOSPI inched 0.4 percent higher.

South Korea earlier reported third quarter growth slightly below expectations, though exports showed signs of recovery, while a private survey showed Japanese factory activity shrank at the fastest pace in over three years in October, hurt by slowing global demand and trade frictions.

On Wall Street overnight, the Dow and the Nasdaq added 0.2 percent each while the S&P 500 gained 0.3 percent.

Telsa shares jumped 21 percent in after-hours trading following a surprise third quarter profit.

Microsoft also posted forecast-beating profit and revenue numbers after the closing bell though the outlook was darkened by slower-than-expected take-up of its Azure cloud services.

Earlier, shares of US industrial bellwethers Boeing Co and Caterpillar Inc ended about 1 percent higher each despite big earnings misses.

RBC Capital Markets' chief economist Tom Porcelli pointed to consistently alarming headlines since the first quarter of 2018 suggesting poor Caterpillar earnings meant a recession was round the corner, though that has yet to transpire.

"We have been down this road before with CAT," Porcelli said in a note titled 'Still Waiting For Recession.'

"If you keep saying a recession is here, it is a mathematical certainty that at some point you will be right," he wrote. "Maybe try again after CAT's next quarterly earnings report."

So far, results from about 125 of the S&P500 companies are out with analysts expecting earnings to have declined 2.9 percent year-over-year, according to IBES data from Refinitiv.

Risk appetite was also aided by a ceasefire in northern Syria which resulted in the lifting of US sanctions against Turkey.

Later in the day, European and US manufacturing numbers are due while the European Central Bank meets, with no change to policy expected at President Mario Draghi's last meeting. Draghi will be replaced by Christine Lagarde.

Activity in the currency market was rather muted.

Sterling paused at $1.2918 after rising 0.3 percent on Wednesday with Brexit developments in focus.

Britain appears closer than ever to resolving its 3-1/2-year Brexit conundrum but there are still hurdles to clear.

EU member states on Wednesday delayed a decision on whether to grant Britain a three-month Brexit extension. Prime Minister Boris Johnson said if the deadline is deferred to the end of January, he would call an election.

"The Brexit battle looks like it will drag on," economists at ANZ wrote in a note.

"The UK government will not meet its current timetable of leaving the EU on 31 October, and an extension appears likely. In the meantime, Brexit uncertainty will keep weighing on UK business investment and activity."

The single currency was flat at $1.1135. The Japanese yen was a shade higher at 108.62 per dollar while the Australian dollar was barely changed at $0.6852.

That left the dollar index mostly unchanged at 97.461 against a basket of six major currencies.

In commodity markets, U.S. crude eased 30 cents to $55.67 while Brent slipped 28 cents to $60.89.

Gold was treading water at $1,492.5 an ounce.

source: news.abs-cbn.com

Asian stocks make cautious gains ahead of key Brexit summit

TOKYO -- Asian stocks and Wall Street futures inched higher on Tuesday as some investors held out hope that Britain still had a chance to avoid a messy exit from the European Union at key negotiations this week.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.01 percent. Australian shares were up 0.12 percent, while Japan's Nikkei stock index rose 1.38 percent.

Capping the broader gains, however, was a perceived lack of progress coming out of US-China trade negotiations. Reports of a "Phase 1" trade deal between the United States and China last week had earlier cheered markets but the dearth of details around the agreement has since curbed this enthusiasm with oil prices extending declines and the safe-haven yen holding gains versus dollar.

The focus has now shifted to Europe where officials from Britain and the EU will meet at a make-or-break summit on Thursday and Friday that will determine whether or not Britain is headed for a so-called no-deal Brexit.

"Given the parliamentary intervention, I would say the chance of a no-deal Brexit is around 10 percent to 20 percent," said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.

"If there is a deal, sterling would rally and risk assets would rally, but the reaction could be limited to a day."

US stock futures rose 0.19 percent on Tuesday in Asia after the S&P 500 ended 0.14 percent lower.

Traders, however, cautioned that sentiment remains fragile because the outcome of Brexit talks is far from certain and the US-China trade war remains a risk to global growth.

British Prime Minister Boris Johnson wants to strike an exit deal at an EU summit on Thursday and Friday to allow an orderly departure on Oct. 31.

The main sticking point remains the border between EU member Ireland and Northern Ireland, which belongs to the UK. Some EU politicians have expressed guarded optimism that a deal can be reached.

However, diplomats from the EU have indicated they are pessimistic about Johnson's proposed solution for the border and want more concessions.

In the currency market, sterling held steady at $1.2608, below a three-month high of $1.2708.

The yen, often considered a safe haven in times of economic uncertainty, edged higher to 108.40 per dollar.

A perceived lack of progress in resolving a prolonged trade row between the United States and China also weighed on investor confidence.

The United States agreed to delay an Oct. 15 increase in tariffs on Chinese goods while Beijing said it would buy as much as $50 billion of US agricultural products after tense negotiations last week.

However, the United States has left in place tariffs on hundreds of billions of dollars of Chinese goods.

Trade experts and China market analysts say chances are high that Washington and Beijing will fail to agree on any specifics - as happened in May - in time for a mid-November meeting between Trump and Chinese President Xi Jinping.

US crude dipped 0.22 percent to $53.47 following a 2 percent decline overnight due to worries that global energy demand will remain weak.

Brent crude also fell 0.29 percent to $59.18 per barrel.

By early last week, hedge funds had become the most bearish towards petroleum prices since the start of the year, according to an analysis of position records published by the U.S. Commodity Futures Trading Commission and ICE Futures Europe. 

source: news.abs-cbn.com

Asia stocks paralyzed, bonds electrified by recession risk

SYDNEY -- Asian shares braced for more volatility on Thursday as eye-catching easings by central banks stoked fears of global recession, driving US yields to near-record lows and lifting gold past $1,500 for the first time since 2013.

Spot gold was last at $1,503.56 per ounce, having been as far as $1,510. The precious metal has surged 16 percent since May as the worsening Sino-US trade dispute sparked a rush to safe havens.

"Financial markets are raising risks of recession," said JPMorgan economist Joseph Lupton.

"Equities continue to slide and volatility has spiked, but the alarm bell is loudest in rates markets, where the yield curve inverted the most since just before the start of the financial crisis."

Early Thursday, Asian share markets were wobbly, as investors tried to find their footing after enduring a string of heavy losses. MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.03 percent, having shed 8 percent in less than two weeks.

Japan's Nikkei inched up 0.1 percent, and away from seven-month lows. E-Mini futures for the S&P 500 lost 0.13 percent.

There was much relief that Wall Street had managed a late come back overnight, so that the Dow ended with a loss of just 0.09 percent having been down 500 points at one stage. The S&P 500 tacked on 0.08 percent and the Nasdaq 0.38 percent.

Stocks had initially been pressured by the flight to bonds. Yields on US 30-year bonds dived as deep as 2.123 percent, not far from an all-time low of 2.089 percent set in 2016.

Ten-year yields dropped further below three-month rates, an inversion that has reliably predicted recessions in the past.

The latest spasm began when central banks in New Zealand, India and Thailand surprised markets with aggressive easings, while the Philippines is expected to cut later Thursday.

FED TO THE RESCUE?

"The decision by these APAC central banks to "go hard and early" has provided further fuel to concerns of a global recession," said Rodrigo Catril, a senior FX strategist at National Australia Bank. "This also means that the Fed will need to come to the rescue."

Chicago Fed President Charles Evans signaled on Wednesday he was open to lowering rates to bolster inflation and to counter risks to economic growth from trade tensions.

Futures moved to price in a 100 percent probability of an Fed easing in September and a near 30 percent chance of a half-point cut. Some 75 basis points of easing is implied by January, with rates ultimately reaching 1 percent.

Dire data on German industrial output stoked concerns Europe might already be in recession and pushed bund yields deeper into negative territory.

All of which fueled speculation that the major central banks would also have to take drastic action, if only to prevent an export-crimping rise in their currencies.

The Bank of Japan would be under particular pressure as its yen has gained sharply from the flood to safe havens, leaving it at 106.10 per dollar from 109.30 just a week ago.

The euro has also bounced to $1.1217, from a two-year trough of $1.1025, while the US dollar index has backtracked to 97.595, from a recent peak of 98.932.

New Zealand's dollar was still picking up the pieces after sliding as much as 2.6 percent on Wednesday when the country's central bank slashed rates by a steep 50 basis points and flagged the risk of negative rates.

The kiwi was huddled at $0.6447 having shed 1.3 percent for the week so far.

Oil prices were attempting a recovery as talk that Saudi Arabia was mulling options to halt crude's descent helped offset a build in stockpiles and fears of slowing demand.

Brent crude futures climbed $1.20 to $57.43, though that followed steep losses on Wednesday, while US crude rose $1.23 to $52.32 a barrel.

source: news.abs-cbn.com

Asia stocks hit 6-month lows, bonds boom in market shakeout

SYDNEY -- Asian shares slid to 6-1/2-month lows on Monday and the yuan slumped to a more than decade trough as a rapid escalation in the Sino-US trade war sent investors stampeding to traditional safe harbors including the yen, bonds and gold.

Markets have been badly spooked since US President Donald Trump abruptly declared he would slap 10 percent tariffs on $300 billion in Chinese imports, ending a month-long trade truce. China vowed on Friday to fight back.

In response, China's yuan burst beyond the psychological 7-per-dollar threshold in a move that threatened to unleash a new front in the trade hostilities - a currency war.

"Everything is selling off right now," said Ray Attrill, head of forex strategy at National Australia Bank in Sydney. "We have no reason to expect any cessation in selling unless we see any strong action to defend any CNY or CNH weakness."

"Our working assumption is that we are unlikely to see any meaningful resolution to the trade dispute anytime soon."

Asian share markets were a sea of red with Japan's Nikkei shedding 2.4 percent to the lowest since early June. It was the sharpest daily drop since March.

Australian shares slipped about 1.4 percent to spend their fourth straight session in the red, and South Korea's Kospi tumbled 2.2 percent to hit its lowest since December 2016.

MSCI's broadest index of Asia-Pacific shares outside Japan sank 2.1 percent to depths not seen since late January.

In China, the blue-chip index fell 0.8 percent while the troubled Hong Kong market hit a seven-month trough. The pain quickly spread globally, with E-Mini futures for the S&P500 and FTSE futures both down over 1 percent.

Oil prices were also pulled down again on demand worries, while gold climbed 0.65 percent to $1,450.41 an ounce.

The grim mood followed declines on Wall Street on Friday with MSCI's gauge of world stocks posting its largest weekly loss of the year.

The trade dispute between the world's two largest economies has already disrupted global supply chains and slowed economic growth.

The abrupt escalation capped a critical week for global markets after the US Federal Reserve delivered a widely anticipated interest rate cut and played down expectations of further easing.

EVER DEEPER CUTS

So far, investors are not buying Fed Chair Jerome Powell's claim that the 25-basis-point rate reduction was a mere "mid-cycle adjustment to policy".

Futures are now pricing in deeper cuts than before last week's Fed meeting. The terminal US rate is seen at 1.22 percent, 93 basis points below the current effective rate.

Analysts at TD Securities are forecasting no less than five more cuts from the Fed, amounting to 125 basis points of easing, over the coming year or so.

Bond markets were well ahead of the game as U.S. 10-year yields dived 7 basis points to 1.77 percent, a violent shift for usually cautious Asian hours. Yields in Australia and New Zealand touched all-time lows.

German 10-year government bond yields on Friday dropped to an all-time low of -0.502 percent and the country's entire government bond yield curve turning negative for the first time ever.

The flight to safety lifted the yen, which often gains at time of stress thanks to Japan's position as the world's largest creditor. The dollar slipped to a 7-month trough of 105.78 yen, while the euro sank to its lowest since April 2017 at 117.64 yen.

That dragged the dollar index off 0.1 percent, though it was up against most other Asian currencies and those exposed to China or commodities including the Australian dollar.

The Aussie, a liquid proxy for emerging market and China risk, slipped to a fresh 7-month trough at $0.6748 after losing 1.6 percent last week.

The Swiss franc was also boosted by safe-haven demand from the escalating trade tensions. Trump is also eyeing tariffs on the European Union, but is yet to make any formal announcements. The euro was relatively steady on the dollar at $1.1119.

Sterling hovered near 2017 lows at $1.2159, pressured by concerns about Britain exiting the European Union without a deal in place.

The pound has been whiplashed since late last month when Boris Johnson, a figurehead for the "leave" campaign in the 2016 Brexit referendum, became the country's prime minister.

Oil extended losses with US crude off 26 cents at 55.40 and Brent down 35 cents at $61.54.

source: news.abs-cbn.com

Asian shares guarded as investors count down to Fed

SYDNEY -- Asian shares got off to a cautious start on Monday as markets count down to a likely cut in US interest rates this week with much riding on whether or not the Federal Reserve signals yet more are in the pipeline.

US and Chinese trade negotiators also meet in Shanghai this week for their first in-person talks since a G20 truce last month, but expectations are low for a breakthrough.

Data out over the weekend showed profits earned by China's industrial firms contracted in June, fueling concerns that the bruising trade war will drag on economic growth.

"We remain cautiously optimistic that both sides can agree on a narrow agreement that addresses important trade-related issues, such as US demands to increase exports," said analysts at Barclays in a note.

"That said, we are skeptical about the prospects of a broader agreement that includes the more challenging security-related issues."

MSCI's broadest index of Asia-Pacific shares outside Japan was all but flat in slow trade. Japan's Nikkei dipped 0.1 percent and E-Mini futures for the S&P 500 lost 0.06 percent.

Interest rate futures are fully priced for a quarter-point rate cut from the Fed on Wednesday, with only a small chance of a half-point move.

More important will be what the central bank flags for the future, given the market implies 100 basis points of easing over the next year or so.

"The messaging will be key and will help markets determine whether the rate cut is just an "insurance cut", or the Fed is embarking on a full easing cycle as the market currently prices in," said Tapas Strickland, director of economics at NAB.

He noted the solid reading on second-quarter US economic growth out last week would support those at the Fed arguing for just one or two cuts.

"The US economy remains the least dirty t-shirt in the global laundry basket. The dollar was stronger across the board in response," said Strickland.

The dollar hit a two-month peak on a basket of currencies at 98.010, and was last trading at 97.975.

The euro stood at $1.1130 on Monday, just above last week's two-year trough around $1.1102, while the dollar held firm on the yen at 108.64.

The dollar got a helping hand from White House economic adviser Larry Kudlow who on Friday said the Trump administration had "ruled out" intervening to push it lower.

Sterling was pinned near 27-month lows around $1.2375 amid reports the government of Prime Minister Boris Johnson was preparing the ground for a "no-deal" Brexit.

Spot gold was a fraction firmer at $1,419.86 per ounce , supported by low bond yields globally.

Oil prices drifted down in early trade pressured by the usual concerns about over supply and slowing world demand.

Brent crude futures eased 36 cents to $63.10, while US crude lost 20 cents to $56 a barrel.

source: news.abs-cbn.com

Asia stocks dip on likely smaller Fed rate cut, oil gains

TOKYO -- Asia stocks eased on Monday as investors reduced expectations of an aggressive interest rate cut by the Federal Reserve, while heightened Middle East tensions following an Iranian seizure of a British tanker lifted crude oil prices.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 percent.

South Korea's KOSPI shed 0.3 percent, Australian stocks lost 0.2 percent and Japan's Nikkei fell 0.5 percent.

Global equity markets had risen briefly towards the end of last week after dovish comments by New York Fed President John Williams boosted the prospect of the central bank lowering rates by 50 basis points at its July 30-31 meeting.

But the stock markets gave back those gains on Friday, with Wall Street shares ending in negative territory, after the New York Fed walked back Williams' comments by saying his speech was not about potential policy action at the upcoming Fed meeting.

Expectations for a 50 bp cut were scaled back further after the Wall Street Journal reported the Fed was likely to cut rates by 25 bps when it meets later this month, and may make further cuts in the future given global growth and trade uncertainties.

"The possibility of a 50 bp cut has almost dissipated following the WSJ report and the New York Fed's attempt to tone down earlier comments by Williams," wrote Kenji Yamamoto, economist at Daiwa Securities.

The dollar and U.S. Treasury yields rose on the greater likelihood of a shallower 25 bp rate cut.

The dollar index against a basket of 6 major currencies was steady at 97.152 after rising 0.4 percent on Friday.

The benchmark 10-year Treasury yield stretched Friday's rise and climbed to 2.058 percent.

The greenback was nearly flat at 107.830 yen after adding 0.4 percent on Friday thanks to the rise in U.S yields.

The euro was little changed at $1.1218 after shedding 0.5 percent on Friday.

In commodities, Brent crude futures were up 1.26 percent at $63.26 per barrel following a gain of about 0.9 percent on Friday.

Crude was buoyant after Iran's Revolutionary Guards on Friday captured a British-flagged oil tanker in the Gulf after Britain seized an Iranian vessel earlier this month, further raising tensions along a vital international oil shipping route.

US crude futures advanced 0.83 percent to $56.09 per barrel.

Gold slipped from a 6-year high as the dollar firmed and as expectations for a deep rate cut by the Fed were dialed back.

Spot gold traded at $1,425.82 an ounce after going as high as $1,452.60 on Friday, its strongest since May 2013.

source: news.abs-cbn.com

Asia stocks rise, dollar sags as Fed chair sets stage for rate cut

TOKYO -- Asian stocks rose and the dollar sagged on Thursday after Federal Reserve Chair Jerome Powell reinforced prospects of a US interest rate cut later this month.

In an appearance before his congressional overseers on Wednesday, Powell confirmed that the US economy was still under threat from disappointing factory activity, tame inflation and a simmering trade war.

Powell said the central bank stands ready to "act as appropriate".

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent, while Japan's Nikkei added 0.15 percent.

South Korea's KOSPI climbed 0.7 percent. Australian stocks were steady.

US stocks ended higher on Wednesday and the S&P 500 briefly crossed the 3,000-point mark for the first time following Powell's remarks.

"The markets had hoped for Powell to express dovish views and they got what they wanted," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

"The focus going forward is US data, such as tonight's CPI, and whether the economy warrants a 50 basis point rate cut this month."

A strong June US jobs report released earlier this month had curbed market expectations that the Fed could lower rates by 50 basis points (bps), and the markets had viewed a 25 bps cut as a more likely option.

But the Fed chair's cautious stance on the world's largest economy helped revive views of a chance of heftier easing at the next Fed policy meeting on July 30-31.

The chance of a 50 bps cut rose to 27.6 percent from 3.3 percent on Tuesday, according to CME Group's FedWatch tool.

The dollar index against a basket of 6 major currencies stood at 97.055 after falling 0.4 percent overnight, when it pulled back from a three-week peak of 97.588 in the wake of Powell's comments.

The greenback was down 0.15 percent at 108.320 yen, forced off a 6-week high of 108.990 scaled the previous day.

The euro nudged up 0.1 percent to $1.1259 after gaining 0.4 percent on Wednesday.

The Australian dollar was steady at $0.6961 following an overnight rise of 0.5 percent against the broadly weaker dollar. The surge helped the Aussie pull away from a 2-1/2-week trough of $0.6910.

The 10-year US Treasury yield was at 2.052 percent after dropping on Wednesday from a three-week high of 2.113 percent following the Fed chair's congressional testimony.

In commodities, US crude oil futures extended the previous day's large gains to touch $60.63 per barrel, their highest since May 23.

The contract had surged 4.5 percent on Wednesday after US crude inventories shrank and as major producers cut nearly a third of offshore Gulf of Mexico production ahead of an expected storm.

source: news.abs-cbn.com

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

Collapsing bond yields push world stocks to new highs

LONDON -- Government bonds held near multi-year lows on Thursday on bets the US Federal Reserve would cut interest rates this month and that other major central banks would embrace looser monetary policy, pushing world stocks to new 18-month highs.

Germany's 10-year government bond yield, a benchmark for euro zone debt, fell to -0.4 percent and matched the European Central Bank's deposit rate for the first time -- a sign that markets are expecting rate cuts.

Other benchmark debt yields also held near record lows in the wake of their recent rally. US 10-year Treasury notes had hit their lowest since November 2016 on Wednesday, pushed down by bets that the European Central Bank's next head will maintain a dovish policy stance to buoy the euro zone economy.

"For central banks, everyone is expecting dovish moves, not only for US but also for Europe and even Japan," said Christophe Barraud, chief economist at Market Securities in Paris. "Everybody is a optimistic for quick central bank moves."

The fall in US Treasuries came after a report showed US companies added fewer jobs than expected in June, raising concerns the labor market is softening even as the current US economic expansion marked a record run last month.

With Wall Street closed for the Independence Day holiday, investors said they were now focused on Friday's US non-farm payrolls, which economists expect to have risen by 160,000 in June compared with 75,000 in May.

Separately, US President Donald Trump on Wednesday repeated his call for the United States to match what he says are efforts by China and Europe to manipulate currencies and pump money into their economies.

Government borrowing costs in the euro zone have fallen to record lows after EU leaders agreed late on Tuesday to name Christine Lagarde as the ECB's new president.

Lagarde, the current International Monetary Fund head, is widely expected to maintain the dovish stance of current ECB President Mario Draghi.

The action in bond markets buoyed stocks. MSCI's all-country world index eked out a 0.1 percent gain after hitting its highest since February last year a day earlier.

Equity markets across Europe were flat, with the Euro STOXX 600 unchanged amid thin volumes. The three major U.S. stock indexes had finished at record closing highs on Wednesday.

Italian 10-year bond yields stayed close to their lowest since late 2016 after the European Commission dropped its threat to discipline Rome over its public finances, pushing the country's main bourse to a new two-month peak.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent.

FLAT DOLLAR, EURO

Expectations for rate cuts by the Fed saw the dollar drift away from recent highs, though currencies were by and large quiet in early European trade.

The dollar index against a basket of six major currencies was unchanged at 96.711.

The euro traded at $1.1284, a touch higher than its two-week low of $1.1268 touched on Wednesday.

FX strategists said that although the drop in US Treasury yields overnight was negative for the dollar, softness in other currencies was lending some support.

"We are seeing some euro weakness and some dollar weakness, and the two are cancelling each other out," said Thu Lan Nguyen, FX strategist at Commerzbank.

"What is happening in US and euro zone monetary policy will also determine what happens in smaller countries," she added.

In commodity markets, oil fell on data showing a smaller-than-expected decline in US crude stockpiles and worries about the global economy.

Brent crude futures, the international benchmark for oil prices, were flat at $63.84 per barrel by 1109 GMT (7:09 a.m. Friday in Manila).

source: news.abs-cbn.com

Weak economic data, tariff concerns weigh on stocks globally

NEW YORK -- Modest gains in US stocks helped global equity indices edge higher on Tuesday as investors weighed a US-China trade truce against Washington's threat to impose additional tariffs on European goods.

Global stock indices traded lower for most of the day after data showing factory activity in the euro zone shrank at a faster pace than expected last month and another report showing US manufacturing activity slowed in June.

In addition, the US Trade Representative's office released a list of additional European products that could be subject to tariffs, on top of products worth $21 billion that were announced in April. These included olives, Italian cheese and Scotch whisky.

Yet gains in dividend-oriented US utilities and real estate stocks helped push the benchmark S&P 500 to a record high ahead of Friday's US jobs report.

"We’ve got a wait-and-see on the trade deal, a wait-and-see on the Fed, a wait-and-see on earnings and all of that is in front of us by at least two weeks," said Art Hogan, chief market strategist at National Securities in New York.

"I am not surprised at all to see this market shift into sideways action."

MSCI's All Country World Index, which tracks stocks in 47 countries, rose 0.2 percent.

On Wall Street, the Dow Jones Industrial Average rose 69.25 points, or 0.26 percent, to 26,786.68, the S&P 500 gained 8.68 points, or 0.29 percent, to 2,973.01 and the Nasdaq Composite added 17.93 points, or 0.22 percent, to 8,109.09.

The pan-European STOXX 600 index rose 0.3 percent following modest gains in Asian equities.

Tuesday was the last full trading day before Friday's monthly US jobs report, a closely watched data point before the US Federal Reserve's meeting in late July. Market participants still expect the Fed to cut interest rates despite the developments in trade talks.

"While the threat of additional tariffs on EU imports is still an overhang for investors, the market is more likely taking a breather until new macro-economic data comes out," said Peter Cardillo, chief market economist at Spartan Capital Securities.

Stocks rallied globally on Monday after US President Donald Trump postponed imposing more tariffs on Chinese products and the two countries agreed to continue negotiations.

Investors, meanwhile, continued to move into safety plays despite the modest gains in equity markets.

Benchmark 10-year notes last rose 17/32 in price to yield 1.9757 percent, from 2.033 percent late on Monday.

The dollar index, which tracks the dollar against major rivals, was 0.1 percent lower at 96.749.

Oil prices slipped as concerns that the global economy could be slowing outweighed an agreement by producer cartel OPEC on Monday to extend supply cuts until next March.

Brent crude fell 3.8 percent to $62.57 per barrel. US crude fell 4.7 percent to $56.32 a barrel.

source: news.abs-cbn.com

US-China trade truce lifts global stocks, gold falls

NEW YORK -- Global stocks rose and bonds retreated on Monday after the United States and China agreed to restart trade talks at the G20 summit over the weekend, leading investors to bet that a breakthrough between the world's two largest economies would jumpstart global economic growth.

The United States and China agreed on Saturday to resume trade negotiations after US President Donald Trump offered concessions to his Chinese counterpart Xi Jinping when the two met at the sidelines of the Group of 20 summit in Japan.

Those included no new tariffs and an easing of restrictions on Chinese tech company Huawei Technologies Co Ltd. China agreed to make unspecified new purchases of US farm products and return to the negotiating table.

"It played out as well as possible," said Hans Peterson, SEB Investment Management's global head of asset allocation. "It gives us time to digest and get a bit better activity in the global economy."

Broad gains in Europe and Japan pushed MSCI's broadest global index up 0.6 percent, adding to a rally that has been one of the global stock market's best first halves to a year ever.

The benchmark S&P 500 index briefly surpassed its previous record high of 2,964.15, set on June 21, before giving back some gains.

On Wall Street, the Dow Jones Industrial Average rose 117.47 points, or 0.44 percent, to 26,717.43, the S&P 500 gained 22.57 points, or 0.77 percent, to 2,964.33 and the Nasdaq Composite added 84.92 points, or 1.06 percent, to 8,091.16.

The Dow had been up more than 200 points in earlier trading.

"Any step toward a trade resolution - and it doesn't have to be a lot of progress - just a step, is viewed very positively by markets," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida. "And investors at this point are trying to focus on the positive in hopes that there will be some trade resolution down the line."

China's CSI300 index of blue-chip stocks jumped 2.6 percent to their highest since late April and Germany's export-heavy DAX gained 1.5 percent to its highest since August. The Huawei hiatus and M&A activity drove Europe's tech sector to a one-year peak.

Fed funds futures dropped over five ticks as the market scaled back the probability of a half-point interest rate cut this month to around 15 percent, from nearer 50 percent a week ago.

"I think the Fed expectations in the market are very aggressive; possibly a bit too aggressive," SEB's Peterson said.

In currency markets, safe havens like the yen and Swiss franc gave up some recent gains. The dollar rose 0.4 percent on the yen to 108.26 and 0.7 percent on the Swiss franc to 0.9830 franc.

The dollar added 0.4 percent on a basket of major currencies to 96.531. The dollar's gains hurt gold, which fell 1.5 percent to $1,388 per ounce.

Oil prices rose as much as $1 a barrel before giving up some of their gains after OPEC and its allies looked set to extend supply cuts at least until the end of 2019. Iraq joined top producers Saudi Arabia and Russia in endorsing the policy.

Brent crude futures rose 10 cents, or 0.2 percent, to $64.64 a barrel. US crude gained 18 cents, or 0.3 percent, to $58.65.

source: news.abs-cbn.com

World stocks mostly flat ahead of G20, dollar slips

NEW YORK -- Global equity markets traded mostly flat on Monday as investors awaited US-China trade talks the end of this week at the G20 summit, and the dollar fell to three-month lows on bets the Federal Reserve may cut interest rates more than once this year.

European stocks stumbled on fears of an escalation in Iran tensions, which also kept gold prices near a six-year high. US President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other Iranian senior officials with new sanctions on Monday.

Earlier in China, shares closed higher on hopes of a thaw in the US-China trade dispute, which has been blamed for slowing global growth. The blue-chip CSI300 index rose 0.2 percent, and the Shanghai Composite Index also gained 0.2 percent.

Chinese state media said on Sunday that President Xi Jinping will attend the G20 summit in Osaka, Japan, in the first official confirmation of his attendance at a gathering where he is expected to meet with Trump.

On Wall Street, the S&P 500 closed slightly lower as healthcare companies lost ground. The technology-rich Nasdaq also fell while the Dow industrials edged higher.

Stocks are unlikely to push much higher without progress on US-China trade or a Fed rate cut, said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

"Until we get that G20 meeting and start to get some feedback from the (Trump) administration, it's going to be tough to go higher," he said.

MSCI's gauge of equity performance around the globe gained 0.05 percent. In Europe, the FTSEurofirst 300 index of leading regional shares closed down 0.25 percent on weak German economic data and a profit warning from Mercedes-Benz maker Daimler.

German business morale fell in June to its lowest level since November 2014, an Ifo institute survey showed, adding weight to expectations that Europe's largest economy contracted in the second quarter. Germany's DAX index fell 0.53 percent.

On Wall Street, the Dow Jones Industrial Average rose 8.41 points, or 0.03 percent, to 26,727.54. The S&P 500 lost 5.11 points, or 0.17 percent, to 2,945.35, and the Nasdaq Composite dropped 26.01 points, or 0.32 percent, to 8,005.70.

The dollar softened against a basket of currencies on bets the Fed may lower rates more than once this year, while US-Iranian tensions provided safe-haven support for the yen.

The dollar index fell 0.22 percent and the euro rose 0.25 percent to $1.1394. The Japanese yen rose 0.04 percent versus the greenback at 107.34 per dollar.

Interest rate futures implied traders have priced in a 100 percent chance the Fed will cut rates at its next policy meeting at the end of July, with a high probability for two additional rate cuts, according to CME Group's FedWatch program.

US Treasury yields fell, holding just above almost three-year lows. The benchmark 10-year US Treasury note rose 13/32 in price to push yields down to 2.0211 percent.

The glum German data pushed down bond yields across the euro zone and reinforced expectations for an ECB rate cut.

In developing markets, the Turkish lira strengthened as much as 2 percent after Turkey's main opposition won a re-run election in Istanbul for mayor on Sunday, a blow to President Tayyip Erdogan. The lira later pared gains.

Bitcoin pulled back from 15-month highs after jumping more than 10% over the weekend. Analysts said the gains came amid growing optimism over the adoption of cryptocurrencies after Facebook announced its Libra digital coin.

Brent crude, the international benchmark, fell on concerns about the possibility of weakening demand after large gains last week caused tensions between the United States and Iran.

Benchmark Brent crude fell 34 cents to settle at $64.86 a barrel, while US crude futures rose 47 cents to settle at $57.90 a barrel.

Gold prices rose more than 1 percent to a near six-year peak as the dollar fell, with safe-haven bullion also boosted by Trump's announcement of fresh sanctions on Iran. U.S. gold futures settled up 1.3% at $1,418.20 an ounce.

source: news.abs-cbn.com

Asian stocks subdued, oil rises on US-Iran tensions

TOKYO -- Asian shares were off to a cautious start on Monday as investors pinned their hopes on any signs of a thaw in Sino-US trade negotiations while oil prices firmed on worries over heightened tensions between the United States and Iran.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.16 percent in early trade while Japan's Nikkei ticked down 0.26 percent.

Wall Street shares closed slightly lower on Friday after hitting a record high thanks to signals last week from the Federal Reserve that it would cut interest rates soon to bolster its economy from protracted trade conflicts.

The Chinese state-run Xinhua news agency said on Sunday China's President Xi Jinping will attend the G20 summit in Japan this week, giving the first official confirmation of his attendance at a gathering where he is expected to meet U.S. President Donald Trump.

The news came after US Vice President Mike Pence on Friday decided to call off a planned China speech, which also increased optimism on upcoming trade talks with Beijing. Pence had upset China with a fierce speech in October in which he laid out a litany of complaints ranging from state surveillance to human-rights abuses.

"Event-driven players are buying back stocks as US and China at least appear to be talking to each other," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Still, there remain doubts on whether the two sides could come to any meaningful agreement as the tensions have extended beyond tariffs, particularly after Washington put Huawei , the world's biggest telecoms gear maker, on a blacklist that effectively bans US firms from doing business with the company.

The US Commerce Department said on Friday it was adding several Chinese companies and a government-owned institute involved in super computing with military applications to its national security "entity list" that bars them from buying US parts and components without government approval.

In China, the Global Times newspaper said FedEx Corp is likely to be added to Beijing's 'unreliable entities list'.

"Few investors would expect a dramatic progress when they are talking about entity lists, just days before a likely summit," Fujito said, adding that markets could slip back on disappointment after the summit.

Oil prices held firm near three-week highs hit last week after the United States and Iran came to the brink of war following Iran's shooting down of an unmanned US surveillance drone.

Brent crude futures rose 0.6 percent to $65.58 per barrel, near Friday's three-week high of $65.76. US crude futures were up 0.75 percent at $57.88 per barrel.

Tehran said the drone was spying over its territory while Washington said it was downed over international airspace.

President Trump said on Sunday he was not seeking war with Tehran after a senior Iranian military commander warned any conflict in the Gulf region could spread uncontrollably and threaten the lives of US troops.

Yet tensions remain high between longtime foes Iran and the United States, with Washington due to announce "significant" sanctions on Iran on Monday.

Also potentially becoming a factor in the equation, Arab politicians and commentators greeted Trump's $50 billion Middle East economic vision with a mixture of derision and exasperation, although some in the Gulf called for it to be given a chance.

The combination of heightened geopolitical worries and likely US interest rates cuts encouraged investors to seek the safety of gold.

The precious metal stood at $1,406.2 per ounce, near Friday's six-year high of $1,411.2.

The euro rose to three-month high of $1.1379 in early Monday trade.

The dollar fetched 107.33 yen, having slipped to as low as 107.045 on Friday, the lowest level since its flash crash on Jan. 3.

The Turkish lira strengthened about 0.75 percent to 5.767 after Turkey's main opposition claimed a decisive victory on Sunday in Istanbul's re-run election, dealing one of the biggest blows to President Tayyip Erdogan.

source: news.abs-cbn.com

Stocks gain, dollar weakens after Fed signals possible rate cuts

NEW YORK -- A gauge of global stock markets strengthened on Wednesday, bolstered by gains on Wall Street, and benchmark US Treasury yields and the dollar dropped after the Federal Reserve signaled possible interest rate cuts over the rest of this year.

The US central bank held interest rates steady, as expected, but said it "will act as appropriate to sustain" the country's economic expansion as it approaches the 10-year mark and dropped a promise to be "patient" in adjusting rates.

The market expects the Fed could cut rates as soon as its next meeting, in July.

"I think it’s right in line with market expectations, puts a July cut in play,” said Brett Ewing, chief market strategist at First Franklin Financial Services in Tallahassee, Florida.

Nearly half of the Fed's policymakers now show a willingness to lower borrowing costs over the next six months.

Even policymakers who did not write down a forecast for a rate cut this year believe "that the case for somewhat more accommodative policy has strengthened," Fed Chairman Jerome Powell said in a news conference following the meeting.

Investors' hopes that the Fed would soon cut interest rates were fueled on Tuesday when European Central Bank President Mario Draghi hinted at economic stimulus, comments that drove up stocks and weakened yields.

"You have global central banks in a nearly orchestrated positioning, prepared to act if respective economies falter," said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey. "Clearly the market is embracing it."

MSCI's gauge of stocks across the globe gained 0.70 percent. The index rose to its highest point in six weeks.

On Wall Street, the Dow Jones Industrial Average rose 38.46 points, or 0.15 percent, to 26,504, the S&P 500 gained 8.71 points, or 0.30 percent, to 2,926.46 and the Nasdaq Composite added 33.44 points, or 0.42 percent, to 7,987.32.

The pan-European STOXX 600 index ended little changed ahead of the Fed decision.

Investors will now turn attention to U.S.-China trade relations, with a meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping set for next week's G20 meeting in Japan.

“You have the G20 summit coming up in a week and a half, said Eric Donovan, managing director, OTC FX-interest rates at INTL FCStone in New York. "It’s kind of ridiculous to think that the Fed was going to cut today."

Benchmark 10-year U.S. notes last rose 8/32 in price to yield 2.0302 percent, from 2.058 percent late on Tuesday.

The dollar index, which measures the greenback against a basket of currencies, fell 0.41 percent, with the euro up 0.31 percent to $1.1226.

US crude settled down 0.3 percent at $53.76 a barrel, and Brent settled at $61.82 a barrel, down 0.5 percent.

source: news.abs-cbn.com

Asia stocks capped ahead of Fed, oil on defensive

TOKYO -- Investor caution ahead of the Federal Reserve's interest rate meeting capped Asian stocks on Tuesday, while crude oil prices retreated as global growth worries overshadowed supply concerns stemming from recent Middle East tensions.

MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.05 percent.

Australian stocks added 0.1 percent while Japan's Nikkei dipped 0.05 percent.

The Fed, facing fresh demands by US President Donald Trump to cut interest rates, begins a two-day meeting later on Tuesday. The central bank is expected to leave borrowing costs unchanged this time but possibly lay the groundwork for a rate cut later this year.

Fresh hopes for looser US monetary policy have been a tonic for risk assets markets, which were buffeted last month by an escalation in the trade conflict between Washington and Beijing. The S&P 500 has gained 5 percent this month after sliding in May on trade war fears.

Focus is now on how close the Fed could be to cutting interest rates amid the raging US-China trade war, signs of the economy losing steam and pressure by President Trump to ease policy.

"The FOMC (Federal Open Market Committee) meeting is the week's biggest event so there will be a degree of caution prevailing in the markets," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

"Expectations for a rate cut in July have increased significantly, so the markets could experience disappointment if the Fed does not send strong signals of impending easing."

US Treasury yields dipped on Monday after the New York Fed's "Empire" gauge of business growth in the state showed a fall this month to its weakest in more than 2-1/2-years, fanning rate cut expectations.

The dollar index against a basket of six major currencies stood little changed at 97.507 after pulling back from a two-week high on the decline in Treasury yields.

The pound traded at $1.2542 after retreating overnight to a six-month low of $1.2532 on Monday on concerns that arch-Brexiteer Boris Johnson will replace Theresa May as prime minister.

The euro was a shade higher at $1.1224 after spending the previous day confined to a narrow range.

US crude oil futures shed 0.08 percent to $51.89 per barrel after retreating 1.1 percent the previous day.

Oil prices had slipped on Monday as weak Chinese economic data released at the end of last week led to fears of lower global demand for the commodity.

Concerns over weakening demand overshadowed tensions in the Middle East, which remained high following last week's attacks on two oil tankers in the Gulf of Oman.

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