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Topix retreats from highs; S&P 500 futures, China shares drop
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Treasury yields decline after spike on Tuesday; oil advances
What promised to be a recovery in equity markets after the global rout faltered in Asia as U.S. stock-index futures declined. Treasury yields fell after spiking on Tuesday and the yen gained as investors turned back to haven assets.
Japan’s benchmarks eked out slim gains at the close after retreating from the session’s highs, as S&P 500 Index futures declined and Chinese shares dropped, suggesting the recovery isn’t yet on solid ground. Gold edged higher. A topsy-turvy session for the S&P 500 Index ended with the gauge advancing 1.7 percent on Tuesday and the Cboe Volatility Index sank almost 20 percent.
The sharp sell-off in stocks around the world that started last week and accelerated this week can be explained by a multitude of factors from concerns over the path of U.S. monetary policy to a rapid unwinding of trades predicated on continued low volatility in markets. Traders are now watching whether this rally can be sustained after the slump left markets from Europe to Japan in technically oversold territory.
Signs of a rebound encouraged a welter of calls to “buy the dip.” Goldman Sachs Group Inc.’s chief strategist was among those saying it’s time to buy U.S. stocks.
Meantime, oil rose after three days of declines as an industry report was said to show an unexpected decline in U.S. crude stockpiles. Metals advanced. Bitcoin traded around $7,400 after at one point sinking below $6,000 for the first time since October.
Here are some key events scheduled for this week:
- India’s central bank will probably hold and maintain a neutral stance Wednesday. Governor Urjit Patel is in a bind, needing to both reduce inflation and keep rates low enough to ensure Prime Minister Narendra Modi can bridge a wider fiscal deficit. The Reserve Bank of India is probably overestimating CPI and economic growth, allowing policy makers to tilt back toward easing by midyear, Bloomberg Economics said.
- Monetary policy decisions are also due this week in Russia, Brazil, Poland, Romania, the U.K., New Zealand, Serbia, Peru and the Philippines.
- Earnings season continues with reports from SoftBank, Sanofi, Philip Morris, Tesla, Rio Tinto, L’Oreal and Twitter.
- New York Fed President William Dudley and Dallas Fed President Robert Kaplan are among policy officials due to speak.
Terminal users can read more in our markets blog.
These are the main moves in markets:
Stocks
- Japan’s Topix index ended up 0.4 percent at the close in Tokyo, pulling back from a gain of as much as 3.5 percent. The Nikkei 225 climbed 0.2 percent.
- Australia’s S&P/ASX 200 Index rose 0.8 percent. South Korea’s Kospi index declined 2.2 percent.
- Hong Kong’s Hang Seng Index was flat, retreating from a 2.9 percent jump earlier. The Shanghai Composite Index fell 1.6 percent, with developers and big banks among the hardest hit.
- Futures on the S&P 500 fell 1 percent. The underlying measure gained 1.7 percent Tuesday.
- The MSCI Asia Pacific Index climbed 0.3 percent.
Currencies
- The Bloomberg Dollar Spot Index fell less than 0.1 percent.
- The yen added 0.3 percent to 109.19 per dollar.
- The euro was steady at $1.2379.
- The pound held around $1.3955.
- The Aussie dollar fell 0.5 percent to 78.69 U.S. cents.
Bonds
- The yield on 10-year Treasuries fell three basis points to 2.77 percent after climbing nine basis points Tuesday.
- Australia’s 10-year yield rose two basis points to 2.84 percent.
Commodities
- West Texas Intermediate crude gained 0.7 percent to $63.80 a barrel.
- Gold rose 0.4 percent to $1,329.88 an ounce.
By Adam Haigh
February 7, 2018, 5:24 PM GMT+11
Source: Bloomberg