Asia Stocks Drop; Dollar Steady at Four-Month High

Asian stocks drifted and the dollar consolidated at a four-month high as investors digested the latest earnings reports and many markets reopened after holidays. U.S. equity futures edged lower after a report the possibility of a subpoena has been raised for President Donald Trump in an ongoing special-counsel investigation.

Ten-year Treasury yields pushed higher, though remained below 3 percent, while risk-off assets such as the yen and gold advanced. Equities declined across the region, with the exception of Australia. Chinese stocks fell as traders returned after a two-day holiday. Wednesday is the only day this week when all the region’s markets trade. FTSE 100 futures advanced, while the pound extended a slide.

Investors and traders have once again become preoccupied by the political situation in Washington. Prosecutors working for Robert Mueller have made clear to Trump’s legal team that the special counsel would consider a subpoena compelling the president to testify before a grand jury if he refuses to participate in a voluntary interview. Market focus is also turning to the Federal Reserve meeting. Investors will watch closely for any signals that policy makers will raise interest rates another three times this year.

Elsewhere, oil pared losses after an industry report showed U.S. crude stockpiles rose by more than expected last week. Apple Inc. gained in after-hours trading after the iPhone maker’s results, helping underpin gains in the Nasdaq 100 futures.

These are some key events to watch this week:

The Federal Open Market Committee ends its two-day meeting Wednesday.

Payroll gains in the U.S. probably picked up in April, with the unemployment rate forecast to drop to 4 percent, according to surveys of economists.

Earnings season continues with HSBC Holdings Plc and Tesla Inc.

And these are the main moves in markets:

Stocks

Topix index dipped 0.2 percent at the close in Tokyo.

Kospi index fell 0.5 percent.

Australia’s S&P/ASX 200 Index rose 0.6 percent.

Hang Seng Index was down 0.5 percent. Shanghai Composite Index lost 0.4 percent.

Futures on the S&P 500 Index were little changed.

FTSE 100 futures gained 0.4 percent.

MSCI Asia Pacific Index fell 0.3 percent.

Currencies

The Bloomberg Dollar Spot Index was little changed.

The Japanese yen pared gains to trade at 109.83 per dollar.

The euro was little changed at $1.1996.

The Australian dollar gained 0.2 percent to 75.03 U.S. cents after dropping to the lowest since June.

The pound fell 0.1 percent to $1.3596.

Bonds

The yield on 10-year Treasuries rose one basis point to 2.98 percent.

Japan’s 10-year yield fell less than one basis point to 0.039 percent.

Australia’s 10-year yield gained four basis points to 2.80 percent.

Yields on 10-year German bunds rose two basis points to 0.58 percent.

Commodities

West Texas Intermediate crude rose 0.5 percent to $67.56 a barrel.

Gold rose 0.3 percent to $1,308.14 an ounce.

LME copper gained 1.4 percent to $6,836.00 per metric ton.

Sources: Bloomberg