Asian stocks set to gain at open; treasuries rise

Asian stocks set to gain at open; treasuries rise
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SYDNEY (Feb 11): Asian equities are poised to open higher Tuesday after U.S. stocks hit a record high as investors looked past the potential economic impact of the spreading coronavirus. Treasuries rose.

Australian shares climbed at the open and futures pointed to gains in Hong Kong. Japanese financial markets are shut for a holiday. U.S. equity futures were little changed in early Asian trading after the S&P 500 Index climbed to a new high Monday, with most sectors advancing. The Chinese yuan traded offshore maintained gains, while the yen was little changed.

Investors are trying to figure out whether the rate of contagion from the coronavirus is stabilizing even as the death toll reached at least 1,011, higher than the SARS outbreak, and one estimate put the mortality rate from the disease at 1%.

Attention turns to corporate earnings, with investors seeking guidance from companies on the expected impact of the virus on their operations. Earnings are due this week from companies such as Alibaba Group Holding Ltd., Credit Suisse Group AG and Nestle SA.

Meanwhile, Federal Reserve Chairman Jerome Powell addresses U.S. lawmakers this week in his semi-annual testimony and markets will be looking for any remarks on the effect of the virus on the economy and monetary policy.

“At the margin, we have to consider that the rebound in growth we were expecting over 2020 may be either delayed or somewhat less vigorous than we were anticipating due to the impact of the virus,” Mark Robertson, head of multistrategy at Aviva Investors, said in an interview in Sydney. “But ongoing monetary policy support, especially what was delivered last
year, a reduction in uncertainty around trade wars, should still be a tail wind.”

Elsewhere, oil remained below $50 a barrel, near the lowest level in more than a year. Prospects for an emergency meeting of OPEC+ withered, raising fears of a supply glut at the same time the coronavirus is weighing on global demand.

Here are some key events coming up:

* Earnings season continues with reports including: MGM Resorts and Cisco Systems on Monday; Softbank on Wednesday; Thursday will bring Alibaba, Nissan, Credit Suisse, Airbus, Nestle and AIG.

* Federal Reserve Chairman Jerome Powell delivers his semiannual testimony in Congress on Tuesday and Wednesday; ECB President Christine Lagarde speaks at the European Parliament in Strasbourg Tuesday.

* Thursday sees a gauge of underlying U.S. inflation, the core consumer price index. It is forecast to increase to 0.2% in January, a faster pace than in December.

* China and the U.S. on Friday lower tariffs on billions of dollars of respective imports as part of the trade deal signed last month.

These are the main moves in markets:

Stocks

* The S&P/ASX 200 Index rose 0.5%.

* Contracts on Hong Kong’s Hang Seng Index rose 0.1% earlier.

* FTSE China A50 futures gained 0.5%.

* S&P 500 futures fell less than 0.1%. The S&P 500 Index rose 0.7%.

Currencies

* The yen was at 109.76 per dollar.

* The offshore yuan traded at 6.9841 per dollar.

* The euro was at $1.0911.

Bonds

* The yield on 10-year Treasuries decreased one basis point to 1.57%. Cash trading won’t resume until London opens because of the holiday in Tokyo.

* Australia’s 10-year bond yield was stable at 1%.

Commodities

* West Texas Intermediate crude rose 0.4% to $49.77 a barrel.

* Gold was little changed at $1,572.67 an ounce.