Dollar Strengthens With Asia Stocks; Gold Drops

Dollar bulls were handed the baton after a Federal Reserve policy maker reinforced the chances for a U.S. interest-rate increase as soon as next month. South Korea led stocks higher in Asia and iron ore surged.

The U.S. currency advanced against most of its major peers after Philadelphia Fed President Patrick Harker said a March hike isn’t off the table. Stocks in Seoul rallied while investors awaited the reopening of U.S. markets after Monday’s holiday. Gold slumped and oil climbed toward $54 a barrel. HSBC Holdings Plc fell in Hong Kong after its profits missed estimates amid lower revenue.

Global equities are trading near a record after Trump’s election spurred optimism in economic growth amid signs of an inflation pickup. Yet caution remains in the markets. The dollar has fallen from the highs at the start of 2017 as investors clamored for detail on U.S. spending plans under the new administration. Japan’s Topix index, which reached a peak at the start of the year, is still trading within a range of about three percentage points over the past 49 days — the narrowest since 1988.

The dollar strengthened as Market News International cited Harker, who votes on policy this year, saying in an interview Friday that “I don’t think we’re behind the curve right now” and that a rate move next month is not “off the table at this point.” Investors have raised their bets of a U.S. rate increase as early as March or May after relatively hawkish congressional testimony last week from Fed Chair Janet Yellen and a strong inflation reading for January.

The U.K. House of Lords began debating the draft law that would allow Prime Minister Theresa May to trigger Britain’s departure from the European Union, with some members seeking to make changes that opposition lawmakers failed to secure in the lower House of Commons. Marine Le Pen gained ground on her rivals for the French election, polls showed, pushing out the spread between 10-year French debt and German bunds.

Earnings remained in focus. HSBC, Europe’s largest bank, lost 3.3 percent in Hong Kong after fourth-quarter profit missed estimates as interest income and fees declined. The lender said it will buy back $1 billion of its stock. BHP Billiton Ltd., the world’s biggest mining company, reported after the Australian market closed a jump in first-half profit as commodity prices surged on increased demand from China.

Here’s what’s coming up that may influence investor decision:

The Fed releases minutes this week from its most recent meeting, possibly giving investors a look into how members see Trump’s policies. Data should show the U.S. housing market perking up at the start of the year. The PMI is expected to rise slightly.

PMI surveys for the euro area and its two largest economies this week may show growth momentum is solid, while the Ifo business confidence survey may support that view for Germany.

Here are the main moves in markets:

Currencies

The Bloomberg Dollar Spot Index rose 0.3 percent as of 3:21 p.m. in Tokyo.

The yen fell 0.4 percent to 113.59 per dollar, after declining 0.2 percent Monday. The Aussie slipped 0.2 percent after a 0.3 percent advance on Monday, while the New Zealand dollar lost 0.5 percent.

The euro dropped 0.3 percent to $1.0585.

Stocks

South Korea’s Kospi index jumped 0.9 percent to the highest level since July 2015. The Topix index added 0.6 percent, rising for a second day.

Hong Kong’s Hang Seng slipped 0.4 percent, while the Hang Seng China Enterprises Index climbed 0.1 percent. The Shanghai Composite Index increased 0.4 percent.

The Stoxx Europe 600 Index closed 0.2 percent higher on Monday. Shares in Unilever tumbled 5.1 percent after the withdrawal of Kraft Heinz Co.’s$143 billion takeover bid.

Bonds

The yield on 10-year Treasuries advanced two basis points to 2.44 percent.

Australian 10-year yields rose one basis point to 2.80 percent.

Commodities

Gold dropped 0.4 percent to $1,233.74 an ounce. The metal has alternated between gains and losses over the past four sessions.

Oil advanced 0.5 percent to $53.65 a barrel, rising for a third straight day.

Iron ore futures soared 3.8 percent. The component used to make steel is up 34 percent this year.

Source: Bloombnerg