Markets

Japan Stocks Set to Rise; Yen Falls, Oil Advances: Markets Wrap

Asian stocks look set to open broadly higher on Monday as investors prepare for a key meeting of global central bankers and recover from a tumultuous week in Washington that culminated in the departure of a controversial Donald Trump adviser.

U.S. stocks rallied from session lows on Friday after the White House announced that Steve Bannon would be leaving his job as chief strategist. American gauges ended the day lower as investors remain on edge after a terror attack in Barcelona and amid simmering tensions on the Korean peninsula. Japan and Hong Kong equity-index futures were higher early Monday, while those in Australia and South Korea declined. Oil extended gains and the yen fell.

The removal of Bannon, the former chairman of Breitbart News, may quell some of the fallout from Trump’s remarks on violence in Charlottesville, Virginia, which continue to raise questions about his ability to retain his team and focus on his economic plans.

Investors pulled $1.3 billion from equity funds in the week ending Aug. 16 as tensions over the Korean peninsula escalated, according to EPFR Global data. Outflows from U.S. stock funds were triple that, suggesting doubts about Trump’s stimulus plans are an additional worry. Heightened terror fears added to the malaise after at least 13 people died when a van plowed into pedestrians in Barcelona Thursday.

Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are among central bankers gathering at Jackson Hole, Wyoming, later this week for their annual meeting where investors are looking for any significant policy statements. The theme this year is “Foster a Dynamic Global Economy,” with discussions likely to touch on growth, inflation and prospect for the Trump trade.

Terminal subscribers can read more on our Markets Live blog.

Among the key events looming this week:

  • Before heading to Jackson Hole, ECB’s Draghi will give a speech on Germany on Wednesday where he will get a chance to clarify the central bank’s latest thinking. Minutes from the Governing Council’s July meeting released last week showed that officials are still uncertain how to signal changes in their policy settings. 
  • Economic releases this week include Thailand second-quarter GDP, sales of new U.S. homes in July, Taiwan July industrial production, Malaysia July CPI, U.K. second-quarter GDP, New Zealand July trade data and Japan July CPI.
  • Indonesia is among central banks to hold monetary-policy meetings.
  • U.S.-South Korea military drills are scheduled to begin.
  • Philippines markets are closed for a holiday on Monday.

Here are the main moves in markets:

Stocks

  • Nikkei 225 Stock Average futures rose 0.2 percent, while contracts on the Kospi index declined 0.2 percent and those on Australia’s main gauge fell 0.1 percent. Contracts on Hong Kong’s Hang Seng Index rose 0.2 percent.
  • Futures on the S&P 500 were 0.2 percent higher as of 7:19 a.m. in Tokyo. The underlying gauge ended down 0.2 percent, while the Dow Jones Industrial Average dropped 76 points and the Nasdaq Composite Index declined 0.1 percent.
  • The MSCI All-Country World Index slid 0.3 percent.

Currencies

  • The yen fell 0.1 percent to 109.30 to the dollar in early trading.
  • The Bloomberg Dollar Spot Index declined 0.3 percent on Friday.
  • The euro was trading at 1.1758 after advancing 0.4 percent.
  • The Australian dollar was steady at 79.28 after gaining 0.6 percent on Friday.

Bonds

  • Yields on 10-year Treasuries gained less than one basis point to 2.19 percent.
  • Germany’s 10-year yield decreased one basis point to 0.41 percent.

Commodities

  • West Texas Intermediate crude gained 0.3 percent $48.64 a barrel, adding to a 3 percent rally on Friday.
  • Gold was little changed at $1,284.50.

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