Stock Rally Fizzles in Asia; Dollar Heads Higher

Stock gains in Asia evaporated, despite another fresh record from their U.S. counterparts, as trade and geopolitical issues continued to simmer. The dollar advanced and Treasury yields were little changed.

Japan’s equity indexes erased earlier gains and stocks fell in Hong Kong and China, while they were little changed in South Korea and Australia. European equity futures slipped. Earlier, the S&P 500 Index rose a fourth day to close above 2,900 for the first time after a better-than-expected reading on the U.S. economy and a rally in tech shares buoyed sentiment. The Australian dollar plunged after second-quarter business investment was much worse than expectations, while the New Zealand dollar slumped as business confidence hit a 10-year low.

Equities have rallied as August draws to a close, with Asia-Pacific stocks recouping much of the losses seen earlier this month. Central bank support in China has gone some way to stabilizing the currency and stemming a rout in Shanghai stocks, though worries remain concerning the U.S.-China trade spat and the pace of monetary tightening in the U.S.

The Korean Peninsula is back in the headlines, with U.S. President Donald Trump accusing China of undermining U.S. efforts to pressure North Korea into giving up its nuclear weapons, indicating his trade war with Beijing is starting to exacerbate geopolitical tensions.

Elsewhere, crude oil added to gains following a bigger-than-expected decline in U.S. crude stockpiles. Gold declined, set for its fifth monthly drop. Argentina’s peso tumbled to a record low after President Mauricio Macri asked the International Monetary Fund to speed up disbursements from its $50 billion credit line to ease the nation’s financial crisis.

Key events scheduled for the remainder of this week:

• China’s official factory PMI are due Friday.

• The Bank of Korea sets policy on Friday. Weak jobs growth has cooled speculation of an interest-rate increase.

Main moves in markets:

Stocks

• Japan’s Topix index was little changed at the 3 p.m. close in Tokyo.

• Australia’s S&P/ASX 200 Index was flat.

• South Korea’s Kospi index was little changed.

• Hong Kong’s Hang Seng Index fell 0.9 percent.

• FTSE 100 Index futures lost 0.2 percent as of 7 a.m. in London.

• S&P 500 futures dipped 0.1 percent. The S&P 500 climbed 0.6 percent.

Currencies

• The yen traded at 111.66 per dollar.

• The offshore yuan lost 0.3 percent to 6.8410 per dollar.

• The Bloomberg Dollar Spot Index rose 0.1 percent.

• The euro declined 0.2 percent to $1.1687.

• The Aussie lost 0.5 percent to 72.77 per dollar, while the kiwi slid 1 percent to 66.48 per dollar.

Bonds

• The yield on 10-year Treasuries held at 2.88 percent.

• Australia’s 10-year bond yield climbed two basis points to 2.57 percent.

Commodities

• West Texas Intermediate crude rose 0.2 percent to $69.68 a barrel, the highest in seven weeks, after jumping 1.4 percent Wednesday.

• Gold fell 0.5 percent to $1,200.78 an ounce.

Source: Bloomberg