Equities in Asia extended gains seen around the world and Treasuries held on to declines on bets economic growth is strong enough to withstand heightened geopolitical tensions.
Benchmarks advanced in Tokyo and Sydney after the S&P 500 Index, the Dow Jones Industrial Average and the Nasdaq Composite Index all closed at fresh record highs on Tuesday. The dollar held onto gains ahead of U.S. inflation data later this week that could impact the timing of the next Federal Reserve interest-rate hike. Oil rose as OPEC and its allies are discussing an extension of output curbs
Record stock prices are provoking concern in some corners of the market with a surge in the number of investors seeking protection from a possible plunge and Leon Cooperman, the billionaire founder of hedge fund Omega Advisors, saying a correction could start “very soon.” A batch of China’s official economic indicators, due Thursday, is expected to signal improving consumption and factory output along with some softening in investment.
“There’s still optimism about the global economy,” Bob Sinche, global strategist at Amherst Pierpoint Securities LLC, told Bloomberg TV in New York. “Markets are still coming to grips with how strong that coordinated global expansion has become and that’s filtering through to earnings and to the stability of growth going forward.”
North Korea said it will accelerate its plans to acquire a nuclear weapon that can strike the U.S. homeland, in its first response to fresh United Nations sanctions. Earlier, Treasury Secretary Steven Mnuchin warned the U.S. may impose additional sanctions on China — potentially cutting off access to the U.S. financial system — if it doesn’t follow through on the new UN restrictions against North Korea.
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Among the key events this week for markets:
U.S. retail sales and inflation data are due.
The U.K. reports wage data Wednesday. The Bank of England will almost certainly leave policy unchanged Thursday.
Also due this week are the data on China’s August industrial production, retail sales and fixed-asset investment.
Australia releases jobs data on Thursday.
Here are the main moves in markets:
The Topix index rose 0.5 percent of 9:16 a.m. Tokyo time. Australia’s S&P/ASX 200 Index added 0.4 percent and the Kospi index in Seoul was little changed.
Futures on Hong Kong’s Hang Seng Index rose 0.1 percent.
Contracts on the S&P 500 were little changed after the underlying gauge climbed 0.3 percent on Tuesday in New York. Apple Inc. slipped, as did some of its biggest suppliers, after investors were underwhelmed at the unveiling of the company’s latest gadgets.
The MSCI All-Country World Index gained 0.3 percent to the highest on record.
The Bloomberg Dollar Spot Index was steady.
The yen traded at 110.18 after sliding 0.7 percent on Tuesday.
The euro traded at $1.1969.
The Australian dollar was at 80.16 U.S. cents.
The yield on 10-year Treasuries held at 2.17 percent, the highest in two weeks, after increasing four basis points on Tuesday.
Australian 10-year bond yields rose about four basis points to 2.68 percent.
West Texas Intermediate crude rose 0.1 percent to $48.29 a barrel, up for a third day. The Organization of Petroleum Exporting Countries OPEC and its allies are discussing extending by more than three months the oil production cuts that expire in March 2018.
The dollar held losses as investors braced for damage that Hurricane Irma may inflict on Florida, and the euro was near a 20-month high after the European Central Bank stopped short of attempting to jawbone it lower. Stocks in Asia were flat at the open.
The yen extended gains after hitting its strongest since November. Asian equities in Tokyo, Seoul and Sydney opened mixed, with benchmarks fluctuating. The euro climbed overnight after ECB President Mario Draghi cautioned on the common currency’s strength though didn’t expand on any action to address it. Ten-year Treasury yields fell toward 2 percent. Gold headed for a third week of gains ahead of a potential North Korean missile launch.
Draghi said he’s watching the euro’s gains as policy makers edge toward settling the future of their bond-buying program. The euro’s surge — more than 14 percent against the dollar this year — was reflected in a downgrade to the ECB’s inflation outlook, though Draghi said economic growth remains solid.
Federal Reserve Bank of New York President William Dudley was the latest U.S. central banker to lay out his views ahead of a policy-setting meeting later this month as expectations for an interest-rate increase have been scaled back. Dudley reiterated the need to continue raising rates while conceding that the Fed may have to rethink its inflation model.
Meanwhile, the threat from North Korea lingers. U.S. President Donald Trump said it’s not “inevitable” that the U.S. will wind up in a war with North Korea over its continued development of nuclear weapons, though military action remains an option. Pyongyang may test a missile this weekend to coincide with its “founding day” on Sept. 9.
Terminal subscribers can read more on our Markets Live blog.
The key events this week:
Japan revised down its second-quarter economic growth to an annualized 2.5 percent from 4 percent, weaker than expectations for a revision to 2.9 percent.
Australia’s home-loan approvals probably increased 1 percent in July from June.
China’s trade surplus is forecast to widen to $48.5 billion in August from July’s $46.7 billion.
China’s forex reserves climbed $11 billion to $3.09 trillion in August, a seventh gain in a row as the yuan rose, the PBOC said Thursday.
Also due in Asia are Taiwan exports.
Malaysia’s central bank held its main rate at 3 percent Thursday as expected.
U.S. jobless claims surged last week by the most since November 2012 because of benefit claims from Hurricane Harvey. They increased to 298,000 versus an estimate of 245,000.
The White House is considering at least six candidates to succeed Janet Yellen as the next Fed chair, people familiar with the matter said.
And here are the main moves in markets:
The Topix index fell 0.2 percent as of 9:38 a.m. in Tokyo, while they South Korea’s Kospi index was down 0.2 percent and Australia’s main gauge was 0.1 percent lower.
Hang Seng Index futures were up 0.4 percent.
Contracts on the S&P 500 Index lost 0.2 percent after the underlying benchmark closed little changed on Thursday. The Nasdaq Composite Index and Dow Jones Industrial Average also barely budged.
The Japanese yen added 0.2 percent to 108.24 per dollar after increasing 0.7 percent.
The euro was slightly higher at $1.2031 after jumping to its strongest since 2015.
The Australian dollar also climbed to 80.55 U.S. cents following a 0.6 percent increase.
The Bloomberg Dollar Spot Index fell for a seventh day and reached the lowest in more than than two years.
Yields on 10-year Treasuries were down 1 basis point to 2.03 percent, after falling more than six basis points Thursday.
The Australian 10-year bond yield slumped about eight basis points to 2.55 percent.
Gold was little changed at $1,350 an ounce, and touched its highest in a year. It advanced 1.1 percent on Thursday.
West Texas Intermediate crude was steady at $49.12 a barrel.
U.S. stocks rose after data underscored the resilience of the American and Chinese economies and concern over North Korea shifted to the background. The dollar slumped after Steven Mnuchin said a weaker currency is “somewhat better” for trade.
The S&P 500 Index erased a monthly loss with its fifth straight advance. Miners led gains in the Stoxx Europe 600 Index after a rise in Chinese manufacturing buoyed industrial metals. Emerging-market stocks a eighth monthly gain to end at the highest since 2014. The dollar also turned lower on weak inflation data, while 10-year Treasury yields slipped to 2.12 percent. Oil rose and gasoline climbed for an eighth day amid the impact of Harvey.
Data Thursday showed China’s official factory gauge strengthened further in August, defying economists’ expectations, after reports Wednesday revealed U.S. second-quarter growth reached the fastest pace in two years and hiring was robust in August. Consumer spending increased by less than estimated in July, though rising incomes and an upward revision to June purchases put the economy on a stable footing for the second half. The focus now moves to jobs data tomorrow as diplomatic efforts to contain North Korea’s nuclear program continue.
“Even though the North Korean tensions are still bubbling away in the background, traders are keen to move back into equities while the sense of panic has evaporated,” said David Madden, market analyst at CMC Markets UK.
President Donald Trump signaled he’s running out of patience with Kim Jong Un’s regime after the latest provocation in which Pyongyang sent a missile over Japan earlier this week. Trump dismissed the idea of negotiating, while his defense chief said the U.S. hasn’t given up on diplomatic options. Meanwhile, Japanese Foreign Minister Taro Kano and U.S. Secretary of State Rex Tillerson agreed in a phone call to send a clear message to prevent North Korea from taking further actions and to prepare additional sanctions.
Terminal subscribers can read more on our Markets Live blog.
Among other key events this week:
U.S. non-farm payrolls data for August will be scrutinized for clues on the Fed’s policy-tightening path. The data is due Friday, along with unemployment and earnings numbers and the Markit U.S. PMI
The eurozone PMI is due Friday, ahead of next week’s ECB rates decision.
And here are the main moves in markets:
The S&P 500 added 0.6 percent to 2,471.41 at 4 p.m. in New York. The index edged higher by 1.17 points in August. Its five-day winning streak is the longest since May.
The Dow Jones Industrial Average rose 0.3 percent to cap a fifth straight monthly advance. The Nasdaq 100 Index ended the month at an all-time high.
The Stoxx Europe 600 Index advanced 0.8 percent, the biggest gain in a week. It fell 1.1 percent in the month.
The Bloomberg Dollar Spot Index fell 0.2 percent.
The euro added 0.2 percent to $1.1903, near the strongest since 2015.
The British pound added 0.1 percent to $1.2931.
The Japanese yen rose 0.1 percent to 110.09 per dollar.
The yield on 10-year Treasuries slipped to 2.12 percent. It fell 17 basis points in the month.
Germany’s 10-year yield also was essentially flat at 0.36 percent.
Gold rose 0.7 percent to $1,317.85 an ounce to cap its best month since January.
West Texas Intermediate crude gained 2.8 percent to $47.25 a barrel.
Copper advanced 0.4 percent to $3.08 a pound.
Gasoline for September advanced for an eighth day, up 14 percent to $2.1476 a gallon. Earlier the front-month contract touched the highest since July 2015.
The Topix index rose 0.6 percent at the close in Tokyo, paring its first monthly drop since March. Australia’s S&P/ASX 500 Index added 0.8 percent. The Kospi retreated 0.4 percent.
Benchmark indexes dropped 0.6 percent in Hong Kong and fell in Shanghai, led by declines in banking stocks that had recently been surging.