SINGAPORE (Reuters) – Tensions between the US and China and sober economic data picked up momentum from Asian stock markets on Thursday, although hopes of stimulus stalling fell and kept pressure on the dollar as investors waited for Congress to agree on a new spending package.
FILE PHOTO: A money changer counts US dollar banknotes at a currency exchange office in Diyarbakir, Turkey May 23, 2018. REUTERS / Sertac Kayar
MSCI’s broadest index of Asia-Pacific stocks outside Japan hit a peak of six and a half months at the start of the session but fell back to become flat after falls in China and Hong Kong.
The European markets also seemed to be set for soft transparency with Euro STOXX 50 futures down 0.4% and FTSE futures down 0.6%, while S&P 500 futures were steady.
Japan’s Nikkei decreased by 0.5%.
The Australian benchmark and the Australian dollar withdrew after the government raised its unemployment forecast, saying new locks would reduce about 2.5 percentage points from growth in the third quarter.
It came after weak US jobs overnight – which have investors who are very focused on US labor data published later in the day and on Friday – and an unexpectedly severe 16.5% decline in Philippine growth.
Reinforced efforts by the Trump administration to clear “unreliable” Chinese apps from US networks also weighed WeChat owner Tencent, Alibaba and the overall sentiment.
However, none of the bad news was enough to actually engage markets to turn or shake investors’ belief that governments and central banks will ease stimulus anytime soon.
“With all the bad news, there are also promises of good news,” said Jasslyn Yeo, global marketing strategist at JP Morgan Asset Management in Singapore.
“Investors know we are on a cyclical trend,” she said. This trend is driving inflation expectations higher and lending support to gold and growth stocks and undermining the dollar as US real returns fall.
Ten-year US Treasury inflation-protected collateral (TIPS) hit a record low of -1.071% on Thursday as the dollar plunged into a few whiskers above a two-year trough. [FRX/] The nominal US returns gave a touch when traders supported after an emission wave.
Gold comfortably sat above $ 2,000 an ounce and crawled back towards a record high here on Wednesday.
Waiting for the next book
Positive revenue surprises from Toyota and Singapore’s DBS Bank in Asia and Disney overnight offered hope that COVID-19’s corporate performance last quarter may not be as bad as first feared.
The next insight into the short-term recovery outlook comes from US unemployment claims at 1230 GMT and wage figures on Friday, as well as regardless of the financial rescue package emerging from political wrangling in Washington.
The best congressmen and White House officials seemed to be hardening their positions on the aid plan on Wednesday, with few hints of compromise or that an unemployment benefit as generous as $ 600 a week could be reintroduced.
But investors interpreted Senate Republican Roy Blunt’s comment that “if there is no deal by Friday, there will be no deal”, as a sign there would be a deal.
Sterling acted cautiously before a decision by the Bank of England (BOE) to be made at 0600 GMT. No changes are expected but some traders are looking for a stupid slope in the language.
“Following the strong 5.5% estimate in July, the pound will be vulnerable to any signs of a BOE drop to zero or negative rates,” said strategists at DBS.
The pound rose 0.1% recently to $ 1.3132, while India’s rupee also traded hard ahead of a central bank meeting that analysts shared on whether they can expect more relief or a break in interest rate cuts.
Other major currencies were fixed with the euro at $ 1.1878 and the yen at 105.51 per dollar.
Brent crude oil fell back to a five-month high overnight, rising 0.2% to $ 45.28 a barrel and US crude was steady at $ 42.17 a barrel.
Reporting by Tom Westbrook in Singapore. Additional reporting by Chris Prentice in Washington; Editing Lincoln Feast and Edwina Gibbs