Stocks Mixed, Dollar Flat as Shutdown Continues: Markets Wrap

Publikuota: 2018-01-22
Juditos Grigelytės (VŽ) nuotr.
Juditos Grigelytės (VŽ) nuotr.
 

Asian equities were mixed, while the dollar and Treasuries halted a recent selloff as investors assess the impact of the U.S. federal government shutdown.

The greenback was steady as the shutdown dragged into a third day after Senate leaders failed to reach agreement on immigration and other issues that have left lawmakers at a stalemate.

The euro pared an earlier advance spurred by optimism Germany’s Angela Merkel has made a breakthrough toward her fourth term after months of stalemate. Foreign exchange traders continue to watch China’s appetite for currency strength as the yuan trades at the symbolically key level of 6.4 per dollar. Equities in South Korea and Australia retreated, with other major bourses advancing.

Equity markets have largely shrugged off America’s government shutdown drama as bets on broadening global economic growth and the profit expansion pushed stocks to all-time highs this month. Commentary from policy makers after central bank decisions in Europe and Japan this week may provide the next impetus for a surge in government bond yields that’s been prompted by signals that unprecedented stimulus will soon be wound back.

“Due to the limited economic impact, markets should be largely unaffected,” by the government shutdown, said Poul Kristensen, portfolio manager at New York Life Investment Management. “If there is a little pullback, we believe it will be a buying opportunity. The last time the government shut down in 2013, markets moved higher.”

Elsewhere, Brent oil halted its decline from the highest level in more than three years as OPEC and Russia said output cuts will continue until the end of the year and signaled a readiness to coordinate beyond that.

Here’s what to watch out for this week:

Barring any last minute dramatics in Washington, President Donald Trump will join world leaders and senior executives in Davos, Switzerland, for the annual World Economic Forum. Central banks: Bank of Japan monetary policy decision and briefing on Jan. 23; European Central Bank rate decision on Jan. 25. U.K. Prime Minister Theresa May’s Brexit bill is set to be taken up in the House of Lords. Earnings season is in full swing: Netflix, UBS Group, Halliburton, Novartis, General Electric, Intel, LVMH Moet Hennessy Louis Vuitton, Starbucks, Hyundai Motor and Fanuc Corp. are among companies posting results. OPEC and partners, including Russia, will meet in Oman to review their strategy.

And these are the main moves in markets: Currencies

The euro was steady at $1.2229 as of 3:08 p.m. in Tokyo. The Bloomberg Dollar Spot Index was little changed. The yen was little changed at 110.79 per dollar. The pound was flat at $1.3869.

Stocks

Japan’s Topix index was up 0.1 percent at the close, while the Nikkei 225 Stock Average was little changed. South Korea’s Kospi index lost 0.7 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent and Hong Kong’s Hang Seng Index was up 0.4 percent. Futures on the S&P 500 lost 0.1 percent. The underlying gauge rose 0.4 percent to a record Friday. The MSCI All Country World Index was little changed after gaining 0.5 percent to an all-time high Friday. It’s up more than 5 percent this year.

Bonds

The yield on 10-year Treasuries was little changed at 2.65 percent, near the highest since June 2014. Australia’s 10-year government bond yield was steady at 2.86 percent.

Commodities

West Texas Intermediate crude rose 0.2 percent to $63.51 a barrel. Gold was little changed at $1,331.99 an ounce.

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