Asian stock futures signal drop; US dollar slips

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(Oct 28): Stocks in Asia looked set to open lower after a retreat in U.S. equities, with lingering concern about the impact of the worsening pandemic on economic activity in some parts of the world. The dollar edged lower.

Equity futures in Japan and Australia dipped, while those in Hong Kong rose. The S&P 500 Index declined modestly, though tech shares eked out gains on Advanced Micro Devices Inc.’s US$35 billion takeover of another chipmaker. The Stoxx Europe 600 Index fell to its lowest since May amid concern about the faster spread of the coronavirus on the continent.

China’s yuan is in focus after the nation’s banks abandoned inclusion of a key factor used to calculate the currency’s daily reference rate. Treasury yields dipped.

Volatility remained elevated amid efforts by U.S. lawmakers to pass a fiscal stimulus package. But with almost no possibility of that happening before next week’s U.S. election, investors were looking for fresh insight into corporate America’s health. A U.S. consumer confidence report came in worse than forecast Tuesday as data showed Covid-19 hospitalizations have risen at least 10% in the past week in 32 states and the nation’s capital.

“Covid case counts and hospitalizations continue to rise -- these will continue to be closely watched as investors gauge the likelihood of more stringent mitigation measures,” said Yousef Abbasi, global market strategist at StoneX.

Elsewhere, crude oil climbed as U.S. Gulf producers shut production ahead of Tropical Storm Zeta. Bitcoin rose past $13,500, approaching levels not seen since just after the burst of the collapse of cryptocurrency prices almost three years ago.

These are some events to watch this week:

  • The Chinese Communist Party’s Central Committee holds its all-important plenum, where it’s expected to chart the course for the economy’s development for the next 15 years. Through Oct. 29.
  • Brexit negotiating teams have started intense daily negotiations, and these are likely to continue as both sides push to finalize a deal by the middle of November.
  • Bank of Japan and the European Central Bank have monetary policy decisions Thursday, followed by briefings from Governor Kuroda and President Lagarde.
  • The first reading of U.S. 3Q GDP Thursday is anticipated to be the strongest on record following a record dive in the prior quarter as many businesses were shuttered by the pandemic.

Here are the main moves in markets:

Stocks

  • The S&P 500 Index fell 0.3%.
  • The Stoxx Europe 600 Index decreased 1%.
  • Futures on Japan’s Nikkei 225 fell 0.7%.
  • Hang Seng Index futures rose 0.4% earlier.
  • Futures on Australia’s S&P/ASX 200 Index declined 0.4%.

Currencies

  • The Bloomberg Dollar Spot Index dipped 0.1%.
  • The yen was at 104.44 per dollar.
  • The offshore yuan was at 6.7142 per dollar.
  • The euro bought US$1.1786.

Bonds

  • The yield on 10-year Treasuries dipped three basis points to 0.77%.

Commodities

  • West Texas Intermediate crude added 1% to US$38.93 a barrel.
  • Gold was at US$1,907.96 an ounce.