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Stocks in Asia Dip as China Returns, Rally Fizzles: Markets Wrap

Bloomberg logoBloomberg 11/02/2019 Adam Haigh
a screenshot of a video game: Global shares post first weekly decline since late December © Bloomberg Global shares post first weekly decline since late December

(Bloomberg) -- Stocks began the week on a cautious note as doubts on the possibility for progress ahead of a potentially pivotal week for U.S.-China trade talks crept back into markets.

Resurgent worries on global growth are driving bonds higher and threatening to dent this year’s rally in riskier assets, with equities dipping last week. Shares in Sydney edged lower, while Korean stocks were little changed. Futures indicated a lower start for equities in Hong Kong. Chinese exchanges reopen after a one-week holiday during which a gauge of the country’s firms traded in Hong Kong fell. Japan is shut for a holiday, so Treasuries won’t trade until the London open after 10-year yields edged down to 2.63 percent last week.

The U.S. and China may struggle to reach a deal before the March 1 deadline for higher tariffs, while warnings mount that the dispute is curbing the global economic expansion and denting corporate profits. Chinese Vice Premier Liu He will join Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in Beijing for high-level trade talks this week. In Washington, the U.S. government could be headed for another shutdown as political tensions flare between Congress and the president.

Elsewhere, iron ore is being rocked by the crisis at Brazil’s Vale SA, with prices surging to the highest in years on concern over a supply crunch. The New Zealand dollar edged up from a two-week low, while crude held below $53 a barrel.

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Here are some key events coming up:

Earnings season continues with reports from companies including Vivendi, Nvidia, Cisco, Nestle, Coca-Cola, Credit Suisse, Michelin and Nissan. Sweden’s Riksbank is expected to keep interest rates at minus 0.25 percent on Wednesday after the first increase in more than seven years in December.Data Wednesday is expected to show U.S. consumer prices rose 0.1 percent in January, after falling 0.1 percent in December.If no deal is reached on the U.S-Mexico border wall, parts of the federal U.S. government may shut down again later this week when stopgap government funding expires.

These are the main moves in markets:

Stocks

The MSCI Asia Pacific Index fell 0.1 percent as of 8:05 a.m. in Hong Kong.Australia’s S&P/ASX 200 Index slid 0.1 percent. Hong Kong’s Hang Seng Index futures retreated 0.4 percent. Futures on the S&P 500 Index were little changed. The underlying gauge rose 0.1 percent Friday.

Currencies

The yen slid 0.1 percent to 109.82 per dollar.The offshore yuan added 0.1 percent to 6.7776 per dollar. The euro was flat at $1.1324.The British pound bought $1.2938.

Bonds

Australia’s 10-year bond yield held at 2.10 percent. The yield on 10-year Treasuries declined three basis points to 2.63 percent Friday.

Commodities

West Texas Intermediate crude slipped 0.3 percent $52.55 a barrel.Gold advanced 0.5 percent to $1,315.61 an ounce Friday.

--With assistance from Sarah Ponczek.

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