Markets

Asian Stocks Advance After U.S. Debt-Ceiling Deal: Markets Wrap

Asian stocks were higher after U.S. equities rose as investors weighed a U.S. deal that ensures the funding of its government through mid-December against persistent geopolitical tensions. The yen stayed lower after an overnight drop.

Shares advanced in Tokyo, Seoul and Sydney, lifting the MSCI Asia Pacific Index. U.S. markets gyrated late Wednesday amid several events that happened in rapid succession, including the resignation of Federal Reserve Vice Chairman Stanley Fischer and a surprise Canadian interest-rate increase. U.S. stocks climbed, the dollar pared losses and 10-year Treasury yields rose, while rates on bills due late this month fell after President Donald Trump sided with Democrats on the deal to extend the U.S. debt limit for three months. Traders are also watching Category 5 hurricane Irma, which is headed for Florida.

Terry Haines, Evercore ISI senior political strategist, discusses President Donald Trump and the U.S. Congress.

Source: Bloomberg)

While the U.S. agreement pushes to the side the North Korea confrontation that has dominated markets most of this week, traders will remain watchful for developments amid reports Pyongyang may fire a ballistic missile before its “founding day” on Sept. 9. Meanwhile, the Fischer departure, effective next month, adds to uncertainty about Fed leadership, given that Janet Yellen’s term as chair expires early next year.

Attention now turns to the European Central Bank meeting on Thursday, with investors looking for clarity from President Mario Draghi on the outlook for the the ECB’s bond-buying program. The Governing Council has been presented with documents outlining multiple scenarios for adjusting quantitative easing, according to euro-area officials familiar with the matter.

Terminal subscribers can read more on our Markets Live blog.

The key events this week:

  • U.S. service industries rebounded in August, with the ISM non-manufacturing index rising to 55.3. July’s trade gap widened less than forecast to $43.7 billion amid rising energy and aircraft exports. The Fed’s Beige Book showed limited wage pressures despite a tightening labor market, while describing growth as “modest to moderate.”
  • China trade figures are anticipated to show another month of solid export growth, while FX reserves probably continued to rise on stricter capital controls, robust growth and a stronger yuan, according to Bloomberg Intelligence.
  • Malaysia’s central bank will probably hold its benchmark rate at 3 percent at meeting Thursday.
  • Also out Thursday, Australian retail sales probably gained 0.2 percent in July from June. The nation’s trade balance is also due.

And here are the main moves in markets:

Stocks

  • The Topix index rose 0.6 percent as of 9:18 a.m. Tokyo time, while the Kospi index in South Korea was up 0.6 percent and Australia’s S&P/ASX 200 Index added 0.4 percent. 
  • Futures on Hong Kong’s Hang Seng index gained.
  • S&P 500 Index futures slipped 0.1 percent after the underlying gauge rose 0.3 percent.
  • The MSCI Asia Pacific Index climbed 0.3 percent.

Currencies

  • The Japanese yen was steady at 109.17 per dollar after falling 0.4 percent Wednesday, when it had earlier traded near its highs for the year. Read here about the impact on the yen in the event of a North Korea war.
  • The Australian dollar was back above 80 U.S. cents.
  • The Bloomberg Dollar Spot Index was down less than 0.1 percent; it hasn’t risen since last Wednesday.
  • The euro was little changed at $1.1924.
  • The Canadian dollar surged 1.2 percent Wednesday to its the strongest in more than two years against the dollar after the Bank of Canada raised the benchmark rate to 1 percent. It was at C$1.2235.

Bonds

  • The yield on 10-year Treasuries held at 2.10 percent after jumping about four basis points Wednesday.
  • Australia’s 10-year yield rose five basis points to 2.65 percent.

Commodities

  • Gold was steady at $1,333.33 an ounce after falling 0.4 percent Wednesday.
  • West Texas Intermediate crude was little changed at $49.13 a barrel after jumping 1 percent.
  • The Bloomberg Commodity Index gained 0.4 percent Wednesday to 85.72, the highest since April.

— With assistance by Andrew Dunn

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