Asian stocks climbed, as a rally in tech shares gathered pace, with investors mulling comments from Federal Reserve officials and the chances of a breakthrough in the US-China trade dispute. The dollar maintained gains.
Shares in Hong Kong, China and Japan led gains, while South Korea and Australia underperformed. Earlier, the S&P 500 Index climbed for a second day. The 10-year Treasury yield was steady as Federal Reserve Vice Chairman Richard Clarida backed gradual rate hikes ahead of Jerome Powell’s speech on Wednesday.
The debate on the pace of monetary policy tightening in the US next year has intensified this week ahead of Powell’s speech that will be parsed for any hints on prospects for a pause in rate increases next year. Clarida said risks to the US economy are "less skewed to the downside," while St. Louis Fed President James Bullard was more cautious, telling Reuters that officials must monitor possible “cracks” in the US recovery and that growth is going to slow in 2019 and 2020.
For investors, a lot also rides on the meeting between US President Donald Trump and his Chinese counterpart Xi Jinping in Argentina this week, amid an escalating trade war that’s been keeping markets hostage. Trump is open to a deal with China but is ready to impose more tariffs if the upcoming talks don’t yield progress, Larry Kudlow, the president’s top economic adviser, told reporters on Tuesday ahead of the tete-a-tete.
“It will depend a lot about the kind of comments that will come out after the meeting,” Massimiliano Bondurri, founder and chief executive officer of SGMC Capital in Singapore, said on Bloomberg TV. “We don’t expect anything saying a deal will never be found, we expect some formal comments will be made as in discussions will be ongoing, but we haven’t found any agreement as of yet, so that’s likely to weigh on the risk sentiment on global markets.”
Elsewhere, the British pound held losses as it appeared UK Prime Minister Theresa May has backed down in a key Brexit battle with Parliament. Bitcoin steadied around $3 800 after plunging 14% on Monday. Oil in the US slipped back below $52 a barrel as an industry report indicated robust US fuel demand.
Presidents Donald Trump and Xi Jinping plan to meet at the G-20 summit in Argentina that kicks off on Friday. Federal Reserve Chairman Powell addresses the New York Economic Club on Wednesday. Thursday sees the release of the minutes from the Federal Open Market Committee’s November meeting.
These are the main moves in markets:
Hong Kong’s Hang Seng Index gained 0.9% as of 13:01 local time. Japan’s Topix index advanced 0.6%. Australia’s S&P/ASX 200 Index slipped 0.1%. The Shanghai Composite added 0.9%. S&P 500 futures rose 0.1%. The S&P 500 Index rose 0.3%. The MSCI Asia Pacific Index gained 0.5%.
The yen was little changed at 113.83/$. The offshore yuan held at 6.9513/$. The Bloomberg Dollar Spot Index was steady. The euro traded at $1.1295. The pound dipped less than 0.1% to $1.2740.
The yield on 10-year Treasuries held around 3.06%. Australia’s 10-year yield fell about one basis point 2.62%.
West Texas Intermediate rose 1.2% to $52.16 a barrel. LME copper steadied after falling 1.1% to $6,124.50 per metric ton on Tuesday. Gold was flat at $1 214.69 an ounce.
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