Asian stocks declined, while the dollar held on to its recent rally as investors assessed the outlook for trade and whether turmoil in some emerging markets can be contained. The pound retreated as the chief European negotiator on Brexit said he strictly opposed the U.K.’s current proposal.
Stocks slipped in Japan, China and Hong Kong, while U.K. equity futures signaled a muted start for trading in London. The S&P 500 closed flat Friday as gains in consumer shares offset losses in energy stocks, while Treasuries posted a modest decline. U.S. markets are closed for Labor Day on Monday. Indonesia’s rupiah slid to a fresh 20-year low on concern the nation’s trade deficit makes the currency vulnerable amid the selloff in emerging-market assets.
With U.S. stocks reaching a fresh all-time high in August and the Federal Reserve set to raise interest rates again later this month, investors are hoping the global economy can withstand shocks from trade restrictions. Emerging markets remain under pressure, with Argentina and Turkey the latest epicenters for crises denting sentiment.
“I don’t buy the ideas that valuations are cheap in these markets” Chris Weston, Head of Research at Pepperstone Financial Pty Ltd., told Bloomberg TV from Melbourne. “My view is to continue trading on the trends — staying bearish on emerging markets. We need to see a perception of the U.S. dollar going lower and clarity that the trade tensions are coming to some sort of a close. I don’t think we’re there yet.”
Elsewhere, West Texas crude slipped and copper added to last week’s losses. The Canadian dollar retreated after Nafta talks stalled.
Key events coming up this week:
• Bank of England governor Mark Carney testifies on the August inflation report and policy decision.
• Executives from Facebook, Twitter and Google testify on social media, Russia meddling.
• U.S. employment report for August is due Friday.
Main moves in markets:
• The MSCI Asia Pacific Index fell 0.8 percent as of 12:44 p.m. in Hong Kong.
• Topix index declined 1 percent.
• The Shanghai Composite index dropped 0.9 percent.
• Hong Kong’s Hang Seng slid 1 percent.
• South Korea’s Kospi index fell 0.8 percent.
• Futures on the U.K.’s FTSE 100 Index were little changed.
• The Japanese yen was steady at 110.92 per dollar.
• The offshore yuan was little changed at 6.8436 per dollar.
• The euro rose less than 0.1 percent to $1.1603.
• The Bloomberg Dollar Spot Index rose less than 0.1 percent to 1,182.67.
• The pound slid 0.2 percent to $1.2929.
• The yield on 10-year Treasuries closed Friday at 2.86 percent.
• Australia’s 10-year yield fell two basis points to 2.50 percent.
• West Texas Intermediate crude fell 0.3 percent to $69.62 a barrel.
• Gold fell 0.3 percent to $1,199.49 an ounce.