SYDNEY (Sept 5): Stocks in Asia looked primed to start Thursday on the front foot after a broad rally in global equities amid an improvement in investor sentiment. The dollar steadied after dropping the most since June.
Futures signaled gains for shares in Japan and Australia.
Hong Kong contracts pointed lower after a 4% surge Wednesday when Carrie Lam formally withdrew legislation to allow extraditions to China. U.S. stocks closed higher and Treasuries slipped. The pound remained firmer as Britain’s parliament rejected Prime Minister Boris Johnson’s demand for an early election and took further steps to block an imminent no-deal Brexit.
Gains for riskier assets brought the S&P 500 back to within 3% of an all-time high as event risks seem to be receding, from a possible Chinese crackdown in Hong Kong to confrontations between the European Union and two of its biggest members. At the same time, investors remain on the alert for any news on U.S.-China trade and signals from the Federal Reserve on how much it may cut this year to stave off an economic slowdown.
“Rather than be scared away from the markets because of this volatility, it’s time to take advantage of that,” Ann Miletti, portfolio manager at Wells Capital Management, told Bloomberg TV. “I’m going to hold the Fed to their word and hopefully they will take timely action.”
Meantime, China signaled that a reduction in the amount of funds banks have to hold in reserve is on the way. The State Council said it wants a “timely” reduction in bank reserve ratios, broad and targeted, as well as the use of other tools to support the economy. The calls come as more and more economists lower their GDP forecasts for 2020 to below 6%.
Elsewhere, oil remained above $56 a barrel. In the U.S., with Florida orange groves seemingly escaping major damage from Hurricane Dorian, concern now turns to soy, corn and cotton fields as well as livestock in Georgia and the Carolinas as the storm churns northward.
Here are some key events coming up:
* Fed speakers this week include Fed chair Jerome Powell on Friday.
* The U.S. jobs report on Friday is projected to show the widely watched nonfarm payrolls rose by 160,000 in August, versus 164,000 the month prior. Estimates are for unemployment to be steady at 3.7% and the average hourly earnings rate of increase to slow to 3.0%.
These are the main moves in markets:
* Futures on the S&P 500 Index were flat as of 8:05 a.m. in Tokyo. The underlying gauge rose 1.1% Wednesday.
* Futures on Japan’s Nikkei 225 gained 0.5%.
* Hang Seng Index futures earlier dipped 0.3%.
* Futures on Australia’s S&P/ASX 200 Index added 0.3%.
* The yen was at 106.36 per dollar after slipping 0.4% in the prior session.
* The offshore yuan traded at 7.1467 per dollar.
* The Bloomberg Dollar Spot Index steadied after sinking 0.6%, the biggest slide since June 20.
* The euro bought $1.1035.
* The British pound was at $1.2250.
* The yield on 10-year Treasuries edged up to 1.47%.
* Australia’s 10-year yield rose one basis point to 0.94%.
* West Texas Intermediate crude dipped 0.3% to $56.12 a barrel.
* Gold was at $1,552.62 an ounce.