Stocks Halt Four-Week Slide in Asia; Pound Drops: Markets Wrap

An investor looks at a screen showing stock board information at a securities company in Hanoi, Vietnam July 6, 2018. Picture taken July 6, 2018. REUTERS/Kham

Asian stocks are set for the first weekly advance in five as trade tensions appeared to ease after China refrained from detailing retaliation plans against threatened U.S. tariff increases. The pound slipped on the latest woes from the Brexit quagmire.

Shares in Japan, Hong Kong and South Korea all rose Friday as the quiescence on the trade front allowed investors time to refocus on a solid outlook for corporate earnings. Shanghai’s benchmark dipped, while the yuan was steady for a second day, though still headed for a weekly drop. The pound slipped after President Donald Trump warned U.K. Prime Minister Theresa May that her Brexit proposal could “kill” any future U.S. trade deal. Ten-year Treasury yields were little changed while West Texas crude held above $70 a barrel.

Officials in Beijing appear to be toning down their responses to President Donald Trump’s tariff threats, amid a slowing economy, falling stock market and weakening currency. China’s exports in June beat estimates, while imports slowed much more than expected, official data showed Friday. Gross domestic product report for the second quarter is due for release on Monday.

Despite optimism a bumper earnings season can propel equities higher, there remains disagreement as to length of the economic cycle. Former U.S. Treasury official Jim Millstein says the next economic downturn could strike in less than two years, while Guggenheim Partners’ Scott Minerd says there is now a higher chance of a deep U.S. recession as soon as next year.

These are some events to look out for the remainder of this week:

Earnings season gets into gear with JPMorgan Chase & Co. and Citigroup Inc. among the largest companies due to give results, as well as India’s Infosys Ltd.

And here are the main market moves: Stocks

Japan’s Topix index advanced 1.2 percent as of the close in Tokyo. Hong Kong’s Hang Seng added 0.4 percent. The Shanghai Composite lost 0.5 percent. Australia’s S&P/ASX 200 Index was flat at the close. Futures on the S&P 500 Index rose 0.3 percent. The underlying gauge climbed 0.9 percent Thursday. The MSCI Emerging Market Index headed for its first weekly advance in five.

Currencies

The Japanese yen was flat at 112.57 per dollar. The offshore yuan rose 0.2 percent to 6.6829. The Bloomberg Dollar Spot Index added 0.1 percent. The euro was little changed at $1.1658. The British pound declined 0.3 percent to $1.3172.

Bonds

The yield on 10-year Treasuries was little changed at 2.85 percent. Australian 10-year government bond yields were steady at 2.63 percent. German bund yields were little changed at 0.36 percent.