British one pound sterling coins stacked in front of the British flag (Photographer: Jason Alden/Bloomberg)

Asian Stocks Mixed on Low Volume; Dollar Steady: Markets Wrap

(Bloomberg) -- Stocks were mixed amid low trading volume while the dollar held to a narrow range as investors weighed the latest comments from Federal Reserve officials on interest rates and the economy.

European stocks were little changed while South Korea’s Kospi index reversed an early gain, falling for the first time in seven sessions. Markets are closed in the U.S., the U.K. and China. The pound rose, while the rand reversed a rally after South African President Jacob Zuma survived a bid by some members of the African National Congress’s top leadership to order his removal from office. Oil was little changed after Friday’s rebound.

A six-week surge in global equities pushed stocks to a record high as investors bet global economic growth can withstand higher U.S. interest rates as soon as next month. While stocks have recovered from worries surrounding the prospects for President Donald Trump’s reform policies, 10-year Treasuries are on course for a fourth monthly advance amid concern inflation is lagging expectations.

“The U.S. economy is about as close to the Fed’s dual mandate goals as we’ve ever been," Federal Reserve Bank of San Francisco President John Williams said in Singapore on Monday. “With the attainment of our dual mandate goals close at hand, it’s more important than ever for monetary policy to work toward what I like to call a ‘Goldilocks economy’ -– an economy that doesn’t run too hot or too cold.”

Disagreement on the strength of the U.S. comes as the first hints of China’s economic performance in May suggest that a slowdown in growth is taking hold as policy makers beef up efforts to clamp down on financial risks. Meanwhile, German Chancellor Angela Merkel gave her strongest indication yet that Europe and the U.S. under President Donald Trump are drifting apart, saying after the weekend’s G-7 meeting that reliable relationships forged since the end of World War II “are to some extent over.”

Read our Markets Live blog.

Here are the key upcoming events this week:

  • Fed policy makers including Lael Brainard and Patrick Harker are due to speak at events this week following Williams’ comments on Monday, ahead of the so-called quiet period for the Fed starting June 3, leading up to the policy meeting.
  • European Central Bank President Mario Draghi speaks to the European Parliament on Monday.
  • Chinese data on manufacturing and and services industries is due May 31.
  • The monthly U.S. jobs report is due on June 2.

Here are the main moves in markets:

Stocks 

  • The Stoxx Europe 600 Index fell 0.1 percent as of 8:24 a.m. in London. The MSCI Asia Pacific Index lost 0.1 percent, with almost an equal number of shares rising and falling.
  • The Topix index advanced less than 0.1 percent. Australia’s S&P/ASX 200 Index fell 0.8 percent. The Hang Seng increased 0.3 percent and the Hang Seng China Enterprises Index rose 0.4 percent. Chinese developers extended Asia’s biggest rally this year, with China Evergrande Group surging to a record in Hong Kong.
  • The Kospi fell 0.1 percent after jumping 0.7 percent earlier in the day. The index closed last week at an all-time high. North Korea conducted another ballistic missile test, just days after world leaders urged Kim Jong Un to abandon his nuclear weapons program.
  • Futures on the S&P 500 Index were little changed after the underlying gauge closed at a record high on Friday.

Currencies and Bonds

  • The British pound climbed 0.2 percent after the biggest weekly decline since November. The euro slipped 0.1 percent to $1.1170.
  • The rand fell 0.3 percent after erasing a gain of 1.8 percent. Pressure had built on Zuma to quit following his March 31 decision to fire Pravin Gordhan as finance minister in a cabinet reshuffle, a move that sparked public protests and cost the country its investment grade credit rating.
  • The yen rose less than 0.1 percent to 111.31 per dollar.
  • The yield on 10-year Treasuries was 2.25 percent at the end of last week.

Commodities

  • Oil fell 0.1 percent to $49.74 a barrel. Crude rallied 1.8 percent on Friday, paring a weekly loss, as investors tempered their disappointment over an agreement by OPEC and its allies to extend production cuts without deepening them.
  • Gold was flat at $1,267.13 an ounce.