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.
FILE PHOTO: Passers-by wearing protective face masks, after an outbreak of the coronavirus, are reflected on a screen showing stock prices outside a broker in Tokyo, Japan March 6, 2020. REUTERS / Issei Kato
The rally follows the gains on Wednesday in Europe and on Wall Street – which left the S&P 500. SPP within a higher level 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 STXEc1 was last 0.1%, FTSE futures FFIc1 decreased 0.7% and S&P 500 futures ESc1 decreased 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 US10YT = RR a touch to 0.6638%, gold XAU = stood at $ 1,926 per ounce and the dollar was back under pressure against the euro. [GOL/]
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. A little sign of progress is of no help to the US economy and helped the euro EUR = to pull back over $ 1.18 and sterling GBP = to move forward.
The Australian dollar AUD = progressed after better-than-expected job creation – although the fact that unemployment peaked at one million for the first time limited profits. It was last at $ 0.7171.
Australia was also an outlier in regional stock markets with sales of communications giant Telstra (TLS.AX) after a profit dampening on the index.
Korea’s Kospi .KS11 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 LCOc1 was last 0.2% softer at $ 45.33 per barrel while US crude oil CLc1 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.
Reporting by Tom Westbrook in Singapore. Additional reporting by Lawrence Delevingne in Boston. Edited by Sam Holmes and Gerry Doyle