© Reuters. Passers-by wearing protective face masks, following an outbreak of the coronavirus, are reflected on a screen showing stock prices outside a broker in Tokyo
By Tom Westbrook
SINGAPORE (Reuters) – Japanese equities rose to a six-month high and the dollar was under pressure on Thursday as investors chose positive results from recent economic data and bet China and the US would stick to their trade agreement at a crucial weekend meeting.
The rally follows Wednesday’s wins in Europe and on Wall Street – which left the S&P 500 () within a hair’s breadth of a record that closed high. But future prices suggest that the latest round of optimism may lose steam during European Day.
Euro STOXX 50 futures () was last 0.1%, futures () held 0.7% and S&P 500 futures () decreased by 0.1%.
“People are looking at the glass half full and testing the water,” said Bank of Singapore currency analyst Moh Siong Sim.
Throughout the week, sales in the US bond market, as investors melt the largest ten-year paper auction, have raised enough returns to trigger a sharp decline in gold and a fall in the yen when flows come in from Japan.
At the same time, the number of daily new COVID-19 infections in the US seems to stabilize at around 55,000 and an unexpected jump in consumer prices last month seemed to strengthen confidence in recovery.
On Thursday, the US 10-year return () gave a 0.66638% touch, gold
But the scale and pace of stock market gains are beginning to raise some concerns. Analysts at OCBC in Singpore are worried that a stress index they launched in April has done nothing but tumble since the start.
“Market stress … has dropped to such a low level that we’re starting to wonder if we’re missing anything,” wrote OCBC economist Wellian Wiranto.
“With that in mind, we are zooming in on the tensions between the United States and China that could begin to become more prominent,” he said.
The next flash point is probably Saturday, when top officials meet to review progress in the Phase 1 trade pact.
White House economic adviser Larry Kudlow said this week that the deal was “good right now,” comments that helped the yuan move a five-month high on Thursday in a sign of market confidence.
But China is lagging behind in agricultural goods and energy purchases and, Bloomberg News reported on Wednesday, is likely to increase other areas in two countries’ growing conflict during trade talks.
Elsewhere, the positive sentiment kept the dollar broad. [FRX/]
Markets are still eagerly awaiting a breakthrough in wrangling over the next US stimulus package. Some signs of progress are not helpful to the US economy and helped the euro () to pull back over $ 1.18 and sterling
The Australian dollar
Australia was also an outlier in regional stock markets, with sales of communications giant Telstra (AX 🙂 following a downturn in the index ().
Korea’s Kospi () led gains in other markets outside Japan, rising 0.7% to a two-year high.
Raw materials were mostly solid gains that were made overnight when a reduction in US commodity stocks raised hopes that fuel demand would recover. [O/R]
Brent crude oil futures () were last 0.2% softer at $ 45.33 per barrel, while US crude () was dipped by the same margin to $ 42.60 per barrel.
US weekly unemployment claims are on the horizon at 1230 GMT and investors expect a modest downward trend to continue.