Stocks Drop in Asia as Oil, Metals Extend Slide: Markets Wrap
Chinese shares traded in Hong Kong fell amid concerns Chinese regulators will limit the flow of mainland funds into the city’s stocks. The yen pared gains after a rally partly fueled by a Kyodo News report that Japan detected radio signals suggesting North Korea is preparing for a missile launch. The Bloomberg dollar index inched lower as the U.S. tax debate gets underway. Oil fell for a second day after slumping from two-year highs. Copper and nickel led industrial metals lower.
China’s stocks have come under pressure in the last week after the government sounded alarm bells about a potential stock bubble and bond yields soared toward 4 percent amid efforts by authorities to reduce risk in the country’s financial markets. A gauge of Chinese shares traded in Hong Kong dropped more than 1 percent, weighing on the Hang Seng Index.
Meanwhile, investors are gearing up for a big week, with U.S. President Donald Trump scheduled to address Senate Republicans Tuesday ahead of a potential vote on a tax overhaul. Also this week, Federal Reserve Chair Janet Yellen testifies before the congressional Joint Economic Committee in Washington, and the confirmation hearing is due for her nominated successor, Jerome Powell. Adding to the mix are data on U.S. GDP, prices and jobs.
In the text of remarks he’ll deliver Tuesday in the confirmation hearing before the Senate Banking Committee, Powell said he expected the central bank to continue raising its benchmark interest rate and trimming its balance sheet under his leadership. New York Fed President William Dudley, who is retiring from the central bank, said in a speech that the U.S. economy is running at close to full employment and growth is expanding at an above-trend pace.The U.S. tax bill will also be at the forefront for investors as the Senate is headed for a marathon debate this week with the aim to hold a floor vote as early as Thursday.
Here are some key events coming up this week:
The U.S. Senate as soon as this week could debate and vote on tax-cut legislation. President Trump will meet with Democratic and Republican congressional leaders Tuesday to discuss a federal spending plan to prevent a partial shutdown and keep the government open after current funding expires Dec. 8. Bank of England publishes annual stress tests Tuesday alongside its Financial Stability Review looking at the health of U.K. banks. In China, the official and Caixin manufacturing PMIs are expected to show mostly steady momentum. Japan industrial production is forecast to have rebounded in October, but CPI may show a sharp divergence between headline and core inflation, Bloomberg Intelligence said. The second print of third-quarter U.S. GDP on Wednesday may be revised up thanks to consumer spending and inventory accumulation, Bloomberg Intelligence said. The core PCE deflator, the Fed’s preferred gauge of inflation, is due Thursday. OPEC meets in Vienna on Thursday.
These are the main moves in markets: Stocks
The Topix index fell 0.3 percent at the close in Tokyo and the Nikkei 225 Stock Average ended flat. Hong Kong’s Hang Seng Index fell 0.6 percent as the Hang Seng China Enterprises Index declined 1 percent. The CSI 300 Index of Chinese large-caps, which has born the brunt of the recent selloff, was down 0.1 percent after dropping as much as 1 percent earlier. Futures on the S&P 500 fell 0.1 percent. The main gauge fell less than 0.05 percent in New York. The MSCI Asia Pacific Index dropped 0.3 percent. A subindex of energy companies and a gauge of mining stocks were the biggest decliners among subgroups in the index as a drop in metals continued in Asia.
Currencies
The Bloomberg Dollar Spot Index fell less than 0.1 percent. The yen dipped 0.1 percent to 111.18 per dollar after climbing 0.4 percent on Monday to the strongest in 10 weeks. The New Zealand dollar advanced 0.4 percent to 69.38 per dollar ahead of a central bank financial stability review. The euro was little changed at $1.1903 after its first decline in a week. The pound traded at $1.3329.
Bonds
The yield on 10-year Treasuries held at 2.33 percent. Australia’s 10-year bond yield fell three basis points to 2.49 percent.
Commodities
West Texas Intermediate crude extended a decline, falling 0.6 percent to $57.76 a barrel. Gold was steady at $1,294.16 an ounce, around the highest in over five weeks. Copper on the LME fell for a second day, down 1.4 percent to $6,846.50 a ton. Nickel on the LME dropped 1.7 percent.
