Banded dollar notes are handled while traveling through a large examining packaging equipment machine at the U.S. Bureau of Engraving and Printing in Washington, D.C. 

Stocks Mixed; Dollar Drops as Yen Rises Past 110: Markets Wrap

(Bloomberg) -- Asia’s blazing stock rally took a pause on Wednesday as investors took stock of the best start to a year for the region since 2006. A strengthening yen hit Japanese shares, and a record winning streak for Chinese stocks in Hong Kong was at risk of finally ending.

The MSCI Asia Pacific Index slipped, with a rise in Australian stocks offset by declines in Tokyo and Hong Kong. South Korean shares were little changed. The dollar dropped for a third day as traders increasingly cite concerns about a widening U.S. trade deficit that’s been highlighted by President Donald Trump’s protectionist moves. The yen bore much of the load of the U.S. currency’s weakness, pushing past 110 per dollar for the first time since September.

"We’re looking for the dollar to continue to depreciate against most currencies," Daniel Morris, a senior investment strategist with BNP Paribas Asset Management, said in an interview with Bloomberg Television. "The U.S. economy has a current-account deficit and it needs to close that -- one way to do that is for the dollar to depreciate."

Futures on the U.S. S&P 500 Index were little changed after the underlying gauge closed at a record high, bolstered by a strong start to the earnings season, with 82 percent of firms that have reported topping estimates.

The 10-year Treasury yield steadied after a second session of declines. Oil in New York held near the highest since December 2014 as signs mount that dwindling U.S. stockpiles are contributing to a tightening global market. Bitcoin was trading slightly below $11,000.

Traders will be turning their attention toward Thursday’s European Central Bank meeting, as well as keeping an eye on Davos, Switzerland, where the world’s business and political elites have gathered for an annual conference that will feature the leaders of the U.S., U.K. and Germany among others.

Terminal users can read more in our markets blog.

Here’s what to watch out for this week:

  • Earnings season is in full swing: Novartis, General Electric, Intel, LVMH Moet Hennessy Louis Vuitton, Starbucks and Hyundai Motor all come later in the week.
  • Barring any last minute changes in Washington, President Donald Trump will join world leaders and senior executives in Davos for the annual World Economic Forum.
  • The European Central Bank announces its rate decision on Thursday
  • The U.K. House of Lords is considering Prime Minister Theresa May’s Brexit bill this week.

These are the main moves in markets:

Stocks

  • The MSCI Asia Pacific Index fell 0.3 percent as of 1:51 p.m. Tokyo time.
  • Topix index declined 0.6 percent.
  • Hong Kong’s Hang Seng Index declined 0.3 percent, while the Hang Seng China Enterprises Index was little changed after dropping as much as 0.6 percent earlier; it has been rising for 18 straight days.
  • South Korea’s Kospi index was little changed.
  • Australia’s S&P/ASX 200 Index climbed 0.5 percent.
  • Futures on the S&P 500 Index were little changed.


Currencies

  • The Japanese yen advanced 0.4 percent to 109.90 per dollar.
  • The euro climbed 0.1 percent to $1.2318, near strongest in more than three years.
  • The Bloomberg Dollar Spot Index was down 0.3 percent and reached its weakest in three years.

Bonds

  • The yield on 10-year Treasuries was little changed at 2.62 percent.
  • Japan’s 10-year yield was flat at 0.076 percent.


Commodities

  • West Texas Intermediate crude was little changed at $64.45 a barrel.
  • Gold was little changed at $1,341.09 an ounce.
  • LME copper advanced 0.4 percent to $6,947.00 per metric ton.

©2018 Bloomberg L.P.

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