(Sept 15): Asian stocks looked poised to drift Tuesday after snapping two weeks of declines Monday. U.S. shares rose for a second day amid a flurry of deal activity, while the dollar weakened.
Futures dipped in Japan and Australia and were little changed in Hong Kong. S&P 500 futures edged up after the benchmark touched a week high before paring gains. The Nasdaq 100 Index broke a two-day slide. Oracle Corp. jumped over 4% on reports it beat Microsoft Corp. for the U.S. operations of TikTok. Immunomedics Inc. almost doubled after Gilead Sciences Inc. agreed to buy the cancer drugmaker for US$21 billion. Positive vaccine comments from Pfizer Inc.’s CEO, which boosted Asian shares Monday, helped sentiment. Treasuries were little changed. The yuan rose to the highest this year.
Investors remain on edge after the first consecutive weeks of declines since March for global stocks, amid a reassessment of valuations, volatility in options markets and uncertainty about a Covid-19 vaccine. The Federal Reserve is expected this week to maintain its dovish stance on policy as investors look for signs the global economy is recovering from the pandemic, and any indication of an overshoot in inflation after the Fed’s new inflation target. The U.S. election is also coming more into focus.
“Market volatility is returning after months of steady advances in risk assets,” BlackRock Investment Institute strategists led by Elga Bartsch said. “Valuations have risen, and we could see greater volatility as a result, especially as the U.S. election closes in.”
Elsewhere, the pound strengthened against peers as Prime Minister Boris Johnson faced a rebellion in Parliament against legislation that would override key elements of the divorce treaty signed with the European Union.
Here are some key events coming up:
- China industrial production and retail sales data is due on Tuesday.
- Wednesday sees the FOMC policy decision and news conference from Chair Jerome Powell.
- Bank of Japan, Bank Indonesia and Bank of England policy decisions come Thursday.
- Friday sees quadruple witching for U.S. markets when the quarterly expiration of futures and options on indexes and stocks happens on the same day.
These are the main moves in markets:
- S&P 500 futures rose 0.1% as of 7:28 a.m. in Tokyo. The S&P 500 Index gained 1.3%.
- Nikkei 225 futures fell 0.6%.
- Australia’s S&P/ASX 200 Index futures lost 0.2%.
- Hong Kong’s Hang Seng Index futures were little changed.
- The yen was at 105.72 per dollar after appreciating 0.4%.
- The offshore yuan traded at 6.8083 per dollar, near the highest in 2020.
- The Bloomberg Dollar Spot Index declined 0.3%.
- The euro was at US$1.1867, the strongest in almost two weeks.
- The British pound advanced 0.5% to $1.2850 after gaining 0.5%.
- The yield on 10-year Treasuries advanced one basis point to 0.67%.
- West Texas Intermediate crude rose 0.4% to US$37.40 a barrel.
- Gold was at US$1,956.52 an ounce.