Asian stocks set for muted start; US dollar climbs

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(Oct 16): Asian stocks looked set for a mixed start Friday as traders awaited news on U.S. stimulus negotiations amid a resurgence in coronavirus cases in some parts of the world. U.S. shares edged lower and the dollar climbed.

Futures dipped in Japan and Australia, and rose in Hong Kong. S&P 500 contracts were steady after the gauge came off session lows as banks rebounded from a two-day selloff and energy shares rallied. House Speaker Nancy Pelosi told Democrats that a Covid-19 relief package won’t wait until January as she was scheduled to have another call with Treasury Secretary Steven Mnuchin, while President Donald Trump said he’d go over US$1.8 trillion in stimulus. Small-cap shares pushed higher, with the Russell 2000 Index up 1.1%, while the Nasdaq underperformed. Elsewhere, Treasuries were steady, while crude oil ticked lower.

Aside from the possibility of fresh U.S. stimulus, investors are monitoring clampdowns in Europe’s biggest cities as concern grows that measures aimed at containing the virus’s spread could cause more damage to a fragile global recovery. Data showed an unexpected surge in U.S. jobless claims to the highest since August -- a troubling sign for a labor market whose recovery was already slowing.

“We need to take into account the tremendous rally we’ve had over the past five months so some consolidation is certainly warranted,” Jim McDonald, chief investment strategist at Northern Trust, said on Bloomberg TV. “The new risk emerging on the horizon is the increasing cases of Covid that are sweeping across Europe and increasing across the U.S.”

Friday brings the expiry of options contracts on U.S. equities, indexes and exchange-traded funds, lifting the chances for intraday volatility.

Here are some key events coming up:

  • European Central Bank President Christine Lagarde leads off the virtual annual meetings of the International Monetary Fund and the World Bank Group. Through Oct. 18.

These are some of the main moves in markets:

Stocks

  • S&P 500 futures added less than 0.1% as of 7:25 a.m. in Tokyo. The index decreased 0.2% on Thursday.
  • Futures on Japan’s Nikkei 225 dipped 0.2%.
  • Hang Seng futures earlier rose 0.4%.
  • Futures on Australia’s S&P/ASX 200 Index fell 0.2%.

Currencies

  • The Bloomberg Dollar Spot Index gained 0.4%.
  • The euro was little changed at US$1.1708.
  • The yen traded flat at 105.41 per dollar.
  • The offshore yuan was little changed at 6.7125 per dollar.

Bonds

  • The yield on 10-year Treasuries rose less than one basis point to 0.73%.

Commodities

  • West Texas Intermediate crude decreased 0.4% to US$40.80 a barrel.
  • Gold was at US$1,907.89 an ounce.