Asian Stocks to Slip; Treasury Rally Resumes

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(July 3): Stocks in Asia looked set for modest declines as haven assets from Treasuries to gold resumed rallies amid doubts over the pace of Federal Reserve rate cuts and warnings about global growth.

Futures dipped in Japan and Australia, and were flat in Hong Kong. The S&P 500 swung between gains and losses before rising into the close for a second straight all-time high. The 10-year Treasury yield slumped to 1.97% and gold rose back above $1,400 an ounce. Demand for riskier assets ebbed after a Federal Reserve official said she’s not ready to support a rate cut and news broke that House Democrats are stepping up their investigation into the president’s taxes. Oil plunged more than 4% in New York.

U.S.-China talks are headed in the right direction, but will take time, Donald Trump trade adviser Peter Navarro told CNBC. Bank of England Governor Mark Carney warned that rising protectionism risks a “widespread slowdown” to the global economy that may require a major policy response. Next up comes data on private hiring, factory orders and the services sector on Wednesday, with June’s government jobs report coming Friday.

“Much depends on a resolution on U.S.-China trade,” Mark Kiesel, global credit chief investment officer at Pacific Investment Management Co., told Bloomberg TV. “If we don’t get resolution on the trade front with China, that will bias the Fed towards not only cutting 25 basis points but then likely having an easing bias for the rest of the year.”

Meantime, Christine Lagarde was nominated to succeed Mario Draghi as president of the European Central Bank when his eight-year term ends on Oct. 31. The euro edged lower.

Here are some key events coming up:

    U.S. equity markets close at 1 p.m. Wednesday and all day Thursday for the Independence Day holiday. The bond markets close early Wednesday.
    The U.S. jobs report is due Friday and is projected to show non-farm payrolls rose by 164,000 in June, rebounding from 75,000 the month prior.

And here are the main moves in markets:
Stocks

    The S&P 500 Index rose 0.3%.
    Futures on Japan’s Nikkei 225 fell 0.2%.
    Hang Seng futures declined 0.1%.
    Futures on Australia’s S&P/ASX 200 Index retreated 0.2%.

Currencies

    The yen was at 107.91 per dollar after rising 0.5%.
    The euro was flat at $1.1288.
    The offshore yuan held at 6.8879 per dollar.

Bonds

    The yield on 10-year Treasuries declined five basis points to 1.97%.

Commodities

    Gold was at $1,418.69 an ounce after surging 2.5%.
    West Texas Intermediate crude fell 4.7% to $56.32 a barrel. - Bloomberg