Asia Stocks to Dip as Focus Turns to Central Banks

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(June 17): Asian stocks looked set to start Monday on the back foot ahead of a big week for central-bank policy.

Futures pointed lower in Japan and Hong Kong, though ticked higher in Australia. The S&P 500 Index dipped Friday but ended the week in positive territory. Treasury yields were little changed as upbeat economic data left some doubts about a more dovish position from the Federal Reserve. Securities in Hong Kong will be closely watched after huge street protests over the weekend.

Investors will be scrutinizing the Fed’s policy decision Wednesday for signals on the chances of rates cuts ahead. Meantime, Commerce Secretary Wilbur Ross reiterated that the prospect of a major trade deal is unlikely to emerge from a possible meeting between President Donald Trump and Chinese President Xi Jinping at the Group of 20 summit in Osaka this month.

“With the market now looking for the U.S. Federal Reserve to cut rates at least twice and possibly three times over the next 12 months, the major question we are grappling with is how likely is this type of aggressive action,” said Ciaran Mulhall, managing director at Solus Capital Partners Ltd. in London.

Elsewhere, oil steadied Friday as investors monitored developments in the Middle East, with the U.S. blaming Iran for Thursday’s suspected tanker attacks. Saudi Arabia hopes OPEC and its allies will agree to extend oil production cuts into the second half of the year at a meeting that will probably take place in the first week of July, according to the country’s energy minister.

Here are some key events coming up:

  • Federal Reserve, the Bank of Japan and the Bank of England all set monetary policy, along with central banks in Norway, Brazil, Taiwan and Indonesia.
  • Fed meeting begins Tuesday with a decision and press conference the next day. Bank officials are expected to debate a rate cut to shelter the U.S. economy, in part, from the fallout caused by Trump’s trade disputes.
  • In the U.K. Tuesday there will be a second ballot on the leadership contest to choose Theresa May’s successor.
  • Thursday brings the BOJ policy decision.

These are the main moves in markets:

Stocks

  • The S&P 500 Index slipped 0.2% Friday.
  • Futures on Japan’s Nikkei 225 slid 0.3% in late Friday trading.
  • Hang Seng futures slipped 0.4%.
  • Futures on Australia’s S&P/ASX 200 Index rose 0.1%.

Currencies

  • The yen edged up to 108.51 per dollar.
  • The offshore yuan was at 6.9324 per dollar.
  • The euro bought $1.1213.

Bonds

  • The yield on 10-year Treasuries ended Friday little changed at 2.08%.

Commodities

  • Gold fell 0.1% to $1,341.70 an ounce Friday.
  • West Texas Intermediate crude ended last week at $52.51 a barrel. - Bloomberg