Asia stocks to rise, dollar drops on dovish Fed

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(July 30): Asian stocks looked set for gains Thursday after a signal from the Federal Reserve that more stimulus will be provided boosted U.S. equities and weighed on the dollar.

Futures rose in Japan, Hong Kong and Australia. Contracts on the S&P 500 Index were steady after the gauge extended its July rally, with the Fed keeping rates near zero and pledging to use all of its tools to support a recovery from the coronavirus pandemic. Chairman Jerome Powell said there are signs the increase in infections is starting to weigh on activity while noting that the path forward for the economy is “extraordinarily uncertain.” Treasuries were steady, while gold continued to climb.

Investors also sifted through a batch of corporate earnings, with Qualcomm Inc. surging in extended trading on a strong sales forecast. Tech giants Apple Inc., Amazon.com Inc., Alphabet Inc., are due to report Thursday.

As the pandemic continues to rage, governments are having to double down on the $11 trillion dollars worth of stimulus and unprecedented central bank support unleashed since the crisis began. The Fed has kept rates pinned near zero since the outbreak’s onset in March and rolled out several emergency lending programs geared toward fostering liquid trading conditions in financial markets.

“The Fed’s large, looming presence and ability to act more if needed has provided a backstop for risk assets over the near term,” said Jason Pride, chief investment officer of private wealth at Glenmede. “The focus now shifts to the FOMC’s September meeting, when investors might expect more action,” he said, referring to the Federal Open Market Committee.

Elsewhere, oil edged higher after the biggest decline in U.S. crude inventories this year, signaling a bright spot in a market weakened by Covid-19.

Here are some key events coming up:

    Apple., Amazon.com, Alphabet, L’Oreal SA, Credit Suisse Group AG and Samsung Electronics Co. report earnings Thursday; results from Chevron Corp. and Caterpillar Inc. are due Friday.
    U.S. second-quarter GDP is expected on Thursday.
    China PMI data comes Friday.

These are some of the main moves in markets:
Stocks

    Futures on the S&P 500 were little changed as of 7:25 a.m. in Tokyo. The index climbed 1.2% Wednesday.
    Futures on Japan’s Nikkei 225 advanced 0.8%.
    Hang Seng Index futures earlier gained 0.1%.
    Futures on Australia’s S&P/ASX 200 Index rose 0.9%.

Currencies

    The Bloomberg Dollar Spot Index dipped 0.3%.
    The euro bought $1.1789.
    The yen was at 104.94 per dollar.
    The offshore yuan traded at 6.9980 per dollar.

Bonds

    The yield on 10-year Treasuries remained at 0.57%.

Commodities

    West Texas Intermediate crude climbed 0.1% to US$41.32 a barrel.
    Gold was at US$1,969.70 an ounce.