Asia Stocks Gain in Global Rebound; Yen Climbs: Markets Wrap

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By Adam Haigh and Andreea Papuc

Asian stocks rose amid signs markets are beginning to stabilize after the biggest weekly rout in two years. Japanese equities pared gains as the yen advanced.

Shares in Hong Kong and China led the rally in Asia after the S&P 500 Index posted its biggest two-day advance in 18 months. Japan’s equities retreated from the day’s highs after traders returned from a holiday Monday, while S&P 500 futures declined. The 10-year Treasury yield was steady after falling back from touching 2.89 percent, and the dollar remained under pressure. West Texas Intermediate oil remained under $60 a barrel.

The Cboe Volatility Index fell, but traders were still on edge following the tumultuous moves last week that wiped $2 trillion from U.S. stocks.

Still, some investors are waiting for another dip in the markets before stepping back in. AMP Capital Investors’ Nader Naeimi — who in September had about 30 percent of holdings in cash — said this is a short-term recovery and there will be another leg down in equities going into the Federal Reserve’s March policy meeting.

“The plan is to buy on the second leg down,” Naeimi, Head of Dynamic Markets in Sydney, told Bloomberg TV. “Usually it’s best to wait for the market to build a base before committing heavily back into buying.”

Morgan Stanley chief U.S. equity strategist Michael Wilson reversed his week-old cautious call, joining peers at Goldman Sachs Group Inc. and JPMorgan Chase & Co. who have told clients to buy the dip.

With investors questioning the outlook for monetary policy, billionaire hedge fund manager Ray Dalio said the risks of a recession in the next 18 to 24 months are rising and that bonds are past their peak. Dalio said the U.S. is further along in the business cycle than he thought and that it’s difficult to make a call on equities.

Investors are eagerly awaiting U.S. consumer-price data due Wednesday, given that pressure on equities has been emanating from the Treasury market and the outlook for inflation.

Terminal users can read more in our markets blog.

Here are some important things to watch out for this week:

  • Lunar new year celebrations for the Year of the Dog begin, affecting China, Hong Kong, Taiwan, Singapore, Malaysia and Indonesia. Chinese mainland markets are closed Feb. 15-21. India is out Tuesday for a public holiday.
  • The U.S. consumer-price index probably increased at a moderate pace in January, economists project. Retail sales in the U.S., also out Wednesday, probably increased for a fifth straight month.
  • Japan is expected to extend the longest stretch of economic growth since the mid-1990s when it reports fourth-quarter gross domestic product on Wednesday.
  • Earnings season continues in full swing with reports from Bunge, TripAdvisor, SunPower, Con Edison, Bombardier, PepsiCo, MetLife, Cisco, Japan Post Bank, Credit Suisse, Nestle, Airbus, Allianz, Telstra and Coca-Cola.

These are the main moves in markets:

Stocks

  • The Topix index fell 0.4 percent as of 1:37 p.m. in Tokyo, erasing a gain of as much as 1.1 percent, and the Nikkei 225 Stock Average was little changed.
  • Hong Kong’s Hang Seng Index climbed 2.2 percent. The Shanghai Composite Index climbed 1.8 percent.
  • Kospi index gained 0.6 percent.
  • Australia’s S&P/ASX 200 Index rose 0.5 percent.
  • Futures on the S&P 500 Index fell 0.3 percent.
  • The MSCI Asia Pacific Index gained 0.8 percent.


Currencies

  • The Bloomberg Dollar Spot Index fell 0.1 percent.
  • The Japanese yen rose 0.3 percent to 108.37 per dollar.
  • The euro was flat at $1.2292.
  • The Thai baht rose 0.7 percent to outperform other Asian currencies.
  • The rand fell 0.1 percent. President Jacob Zuma was said to refuse calls to step down.


Bonds

  • The yield on 10-year Treasuries fell less than one basis point to 2.85 percent.
  • Japan’s 10-year yield rose less than one basis point to 0.069 percent.
  • Australia’s 10-year yield fell four basis points to 2.87 percent.


Commodities

  • West Texas Intermediate crude advanced 0.6 percent to $59.63 a barrel.
  • Gold rose 0.1 to $1,324.19 an ounce.
  • LME copper rose 1 percent to $6,900.00 per metric ton.

 

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