© Reuters. A man wearing a protective face mask following the outbreak of the coronavirus (COVID-19) is running for a share of a shortfall outside a broker in TokyoBy Wayne Cole
SYDNEY (Reuters) – Asian stocks plunged back to recent peaks on Monday as Chinese markets swung higher, while investors waited to see if recent sales in longer-dated U.S. treasuries would expand and perhaps take some pressure off the beleagured dollar.
MSCI’s broadest index of shares in Asia-Pacific outside Japan () gained 0.5% to 565.74, moving closer to the January high of 574.52.
Chinese blue chips () led the way with gains of 2.4%, with the country’s central bank providing more loans to the financial system in the medium term.
Beijing also granted a patent for CanSino Biologics Inc’s (HK 🙂 COVID-19 vaccine candidate Ad5-nCOV.
Japan’s Nikkei () plunged 0.6% after hitting a six-month high on Friday as the country suffered its record-breaking largest economic contract in the second quarter.
E-Mini futures for the S&P 500 () strengthened 0.28% to be just below the record high of 3,386.15. EUROSTOXX 50 futures () easte 0.1% and futures () 0.04%. ()
The second-quarter U.S. season picks up with the major retailers reporting this week, including Walmart Inc (N :), Home Depot Inc (N 🙂 en Kohls Corp (N :).
Sino-US relations remain a sticking point with US President Donald Trump on Saturday, saying he could put pressure on more Chinese companies such as technology giant Alibaba (N 🙂 after he moved to ban TikTok.
US oil transfers to China will rise sharply in the coming weeks as the two top economies of the world come together to halt their January deal after a lengthy trade war.
News that the planned review of the US-China Phase-One Trade Agreement was postponed indefinitely over the weekend did not elicit much of a reaction.
OEJE DE FED
The highlight of the economic calendar will be the release of the minutes of the last Federal Reserve policy meeting.
“Market participants will seek insight into the details and exact timing of when the Fed’s monetary policy review will be completed, as well as more clarity regarding the potential timing and structure of any changes to forwarding,” analysts noted at NatWest Markets.
Speculation is widespread the Fed will adjust an average inflation target, which sought to push inflation above 2% for a while to compensate for the years it has been running below.
That combined with massive new debt ban caused a sharp increase in long-term bond yields last week with yields of 30 years () with 21 basis points increasing as the curve steepened.
The rise in yields gave the dollar some rest after weeks of loss. Against a currency exchange rate, the dollar was a fraction lower at 93,016 (), still uncomfortably close to the recent trough of 92,521.
The euro () flattened out a bit last week when it met resistance around the two-year high of $ 1.1915. However, it still ended the week with a profit of 0.5% and was last held at $ 1,1856.
“Investors should stay strategically long EUR / USD at the position,” said CBA forex analyst Elias Haddad. “Greater fiscal solidarity of the Eurozone, true differences of two years swap rate and relative trends of the central bank balance between the Eurozone and the US suggest that the fundamental rise in EUR / USD is intact.”
The single currency also made a notable break higher on the yen () to reach ground that has not been believed since April 2019. Indeed, the yen fell last week against most of its peers, with the dollar at 106, 59 yen
In commodity markets, gold stood at $ 1,943 an ounce
Oil prices rose ahead of hopes on Chinese demand and data showed crude oil, gasoline, and distillate inventories all declined over the weekend of August 7th.[O/R]
Brent crude () futures rose 33 cents to $ 45.13 per barrel, while US crude () rose 38 cents to $ 42.39.
