Asian Stocks to Decline; Dollar Extends Advance: Markets Wrap

Asian stocks looked set for declines afterwarnings from Federal Reserve officials on the need for more stimulus pushed U.S. equities to an eight-week low. The dollar extended this week’s gains.

Futures in Japan and Hong Kong retreated. S&P 500 futures opened flat after the gauge fell over 2% Wednesday, taking losses from its recent high to almost 10%. Fed Chairman Jerome Powell reiterated there’s a long way to go for the economic rebound, which will likely require more support. The need for further aid was also stressed by other Fed officials. Treasuries were little changed.

The caution comes as virus cases tick higher in the U.S. amid a resurgence in infections in some other parts of the world. Traders are losing faith in the strength of the economic recovery, with the chances for Congressional stimulus withering ahead of a contentious election battle. Global equities are on course for the first monthly slide since March.

“Markets are digesting and grappling with this idea that the growth expectations that investors have might not materialize,” said Lauren Goodwin, economist and multi-asset portfolio strategist at New York Life Investments. “As the fiscal impulse in the U.S. starts to wane, some of these expectations for a slow and steady recovery are shaken.”

Elsewhere, crude oil retreated and gold steadied. In China, traders will be closely watching the daily currency fixing later Thursday.

These are some events to watch this week:

  • Powell and Treasury Secretary Steven Mnuchin will testify before a Senate committee on the economic response to the pandemic on Thursday.
  • U.S. initial jobless claims are due Thursday.

Here are some of the main moves in markets:

Stocks

  • S&P 500 futures added 0.1% as of 8:15 a.m. in Tokyo. The gauge declined 2.4% on Wednesday.
  • Futures on Japan’s Nikkei 225 dropped 0.5%.
  • Hang Seng Index futures earlier slid 0.9%.
  • Futures on Australia’s S&P/ASX 200 Index fell 0.9%.

Currencies

  • The Bloomberg Dollar Spot Index jumped 0.7%.
  • The euro bought $1.1663.
  • The yen was at 105.37 per dollar.
  • The offshore yuan was at 6.8254 per dollar.

Bonds

  • The yield on 10-year Treasuries was at 0.67%.

Commodities

  • West Texas Intermediate crude fell 0.9% to $39.59 a barrel.
  • Gold traded at $1,862.39 an ounce.

— With assistance by Rita Nazareth, Sarah Ponczek, and Nancy Moran

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