Business Maverick

Business Maverick

Dollar Pressure Endures; Storm Delays Hong Kong: Markets Wrap

While the structural issues South Africa is facing may limit the potential upside, investors should remember that not all JSE-listed companies are affected to the same extent, says Abax Investments. (Image: Adobestock)

The dollar remained near a more than two-year low while Asian stocks traded Wednesday with diverging moves despite a record close for U.S. equities. The morning session for Hong Kong’s equity market was canceled due to a typhoon.

South Korean shares rebounded from Tuesday’s slide, while Japan traded flat and Australia climbed. S&P 500 contracts were steady after the gauge eked out a gain to close above the previous Feb. 19 all-time high. Chinese shares slipped amid a request from the Trump administration for U.S. colleges to divest them. Traders in Hong Kong are expecting the equity market to reopen later Wednesday. Treasuries ticked up.
Asia, U.S. stock correlation turns negative as S&P 500 hits record

Massive stimulus injections and a surge in technology companies have driven the rebound in American equities from a pandemic-induced selloff. Coronavirus case numbers in the U.S. look to be improving, as evidence grows that the peak of the flareup across Sunbelt states is over. While stimulus talks have stalled, better-than-feared economic data and corporate earnings have instilled optimism that a recovery is taking shape.

“We have a Federal Reserve that is all in, keeping rates low probably across the curve for as far as the eye can see,” Katie Nixon, chief investment officer at Northern Trust Wealth Management, said on Bloomberg TV. “That is supportive of higher valuations.”

House Speaker Nancy Pelosi indicated that Democrats might cut their stimulus proposal to seal a deal with Republicans and speed Covid-19 relief, then come back after the November elections with additional agenda items. Meanwhile, China denounced the U.S.’s latest moves to curb Huawei Technologies Co.’s access to commercially available chips, the latest blow in an increasingly tense relationship between the world’s two biggest economies.

Gold traded at around $2,000 an ounce amid the escalating U.S.-China tensions.

Here are some key events coming up:

  • Target Corp. and Nvidia Corp. report on Wednesday. Results from Alibaba Group Holding Ltd. and Qantas Airways Ltd. are due Thursday.
  • Minutes of the latest FOMC meeting are due Wednesday.
  • The EIA’s crude oil inventory report comes out Wednesday.
  • The Joint Ministerial Monitoring Committee — the panel that reviews the OPEC+ agreement — is due to meet on Wednesday.
  • U.S. jobless claims for the week ended Aug. 15 are due Thursday.
  • China’s loan prime rate is due Thursday.
  • Euro-area PMIs will be released on Friday.

These are some of the main moves in markets:

Stocks

  • Futures on the S&P 500 gained 0.1% as of 11:27 a.m. in Tokyo. The index rose 0.2% on Tuesday.
  • Japan’s Topix index added 0.1%.
  • Shanghai Composite lost 0.7%.
  • South Korea’s Kospi rose 0.6%.
  • Australia’s S&P/ASX 200 Index gained 0.9%.
  • Euro Stoxx 50 futures climbed 0.3%.

Currencies

  • The Bloomberg Dollar Spot Index was steady.
  • The euro bought $1.1937, up 0.1%.
  • The yen was little changed at 105.42 per dollar.
  • The offshore yuan traded at 6.9104 per dollar, down 0.1%.

Bonds

  • The yield on 10-year Treasuries was at 0.66%.
  • Australia’s 10-year yield was at 0.87%.

Commodities

  • West Texas Intermediate crude decreased 0.4% to $42.71 a barrel.
  • Gold was at $1,994.22 an ounce, down 0.4%.
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