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Asia Stocks Build on Weekly Gain; Yuan Rises Again: Markets Wrap

Bloomberg logoBloomberg 11/01/2019 Adam Haigh
a screenshot of a video game: Yuan extends recent advance to highest level since July © Bloomberg Yuan extends recent advance to highest level since July

(Bloomberg) -- Asian equities posted modest gains Friday and were on course for the strongest week since early November, bolstered by continued signs of flexibility from the Federal Reserve and optimism over U.S.-China trade negotiations. The yuan climbed to the strongest since July.

Shares in Tokyo led the region, with trading in Hong Kong, South Korea and Australia mostly flat. The S&P 500 earlier extended its rally since Christmas Eve past 10 percent, though gains were limited as retailers sank amid concerns about a sales slowdown. Fed Chairman Jerome Powell underscored the message of patience with further interest-rate hikes, while saying the central bank will keep shrinking its balance sheet to a more normal level -- a remark that sparked an intraday slide in stocks. Later, Vice Chair Richard Clarida said any sustained headwinds to the U.S. economy should be offset by policy.

Equities are rallying around the world as signs of progress between the world’s two biggest economies and dovish commentary from the Fed help lift sentiment that took a battering late in 2018. And China’s yuan, which slumped last year as trade tensions worsened, is heading for its best week since 2005 -- back when the country dropped a fixed peg to the dollar.

Still, worries remain about economic growth and earnings prospects.

“Markets are ultimately waiting to see if Fed’s new rhetoric related to stepping back, does it translate to action, and does the Fed actually pause at some point,” Dan Skelly, head of equity model portfolio solutions at Morgan Stanley, told Bloomberg TV in New York. “That’s really what we are waiting for to see a sustained move higher” in stocks, he said.

Elsewhere, oil remained above $52 a barrel despite slipping in early Friday trading. It’s up about 9 percent this week.

These are the main moves in markets:

Stocks

The MSCI Asia Pacific Index advanced 0.2 percent as of 11:01 a.m. in Hong Kong. Japan’s Topix index rose 0.3 percent. Australia’s S&P/ASX 200 Index slid 0.2 percent. Hang Seng rose 0.1 percent. Futures on the S&P 500 Index slipped 0.2 percent. The S&P 500 rose 0.5 percent Thursday. Futures on the Euro Stoxx 50 gained 0.2 percent.

Currencies

The yen was steady at 108.29 per dollar. The offshore yuan climbed 0.4 percent to 6.7675 per dollar. The Bloomberg Dollar Spot Index slid 0.2 per cent. The euro added 0.2 percent to $1.1521.

Bonds

The yield on 10-year Treasuries dipped one basis point to 2.73 percent. Australia’s 10-year bond yield held at 2.32 percent.

Commodities

The Bloomberg Commodity Index rose 0.3 percent. West Texas Intermediate crude fell 0.3 percent to $52.41 a barrel after entering a bull market on Wednesday. Gold rose 0.3 percent to $1,291.04 an ounce.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Christopher Anstey at canstey@bloomberg.net

©2019 Bloomberg L.P.

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