Emerging Stocks Advance Before Fed as Dollar Drops; Gold Gains
©2015 Bloomberg News
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(Bloomberg) — Emerging-market stocks climbed for the first time in 10 days and the dollar weakened as investors awaited what will probably be the first Federal Reserve interest-rate hike in almost a decade this week. Gold advanced. The MSCI Emerging Markets Index rebounded from a six-year low as the Hang Seng China Enterprises Index and Taiwan’s Taiex rose. Bloomberg’s dollar index snapped a three-day gain. Gold headed for its biggest advance in more than a week. Hong Kong’s benchmark gauge flirted with its longest losing streak since 1984.“Investors are focusing on the Fed,” Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo, said by phone. “They want to see what the Fed will announce on the target interest rate at the end of 2016. There’s market consensus that rates will rise this week, but it is unclear what happens after that.” A sense of caution prevails in global financial markets as investors start a count down to Wednesday’s Fed meeting, where U.S. policy makers are expected to end a seven-year era of near- zero borrowing costs. Weakness in high-risk credit markets has sparked fear of contagion, unsettling markets along with the gyrations in crude oil.
Stocks
MSCI’s developing nation index rose 0.6 percent at 11:22 a.m. in Hong Kong. The Hang Seng China Enterprises Index advanced 1.3 percent after its relative strength index fell below 30. Taiwan’s Taiex Index gained 0.8 percent. The Shanghai Composite Index was little changed after surging 2.5 percent on Monday. The Hang Seng Index added 0.5 percent, snapping an eight-day loss. Japan’s Topix Index slid 0.8 percent, dragging the MSCI Asia Pacific Index down 0.2 percent toward its lowest level since Oct. 2. Materials shares were the biggest losers on the Asian gauge, falling 0.7 percent at their lowest point since the end of September.
Futures on the Standard & Poor’s 500 Index climbed 0.3 percent after the U.S. benchmark ended ended last session up 0.5 percent as energy stocks erased their declines.
MSCI’s developing nation index rose 0.6 percent at 11:22 a.m. in Hong Kong. The Hang Seng China Enterprises Index advanced 1.3 percent after its relative strength index fell below 30. Taiwan’s Taiex Index gained 0.8 percent. The Shanghai Composite Index was little changed after surging 2.5 percent on Monday. The Hang Seng Index added 0.5 percent, snapping an eight-day loss. Japan’s Topix Index slid 0.8 percent, dragging the MSCI Asia Pacific Index down 0.2 percent toward its lowest level since Oct. 2. Materials shares were the biggest losers on the Asian gauge, falling 0.7 percent at their lowest point since the end of September.
Futures on the Standard & Poor’s 500 Index climbed 0.3 percent after the U.S. benchmark ended ended last session up 0.5 percent as energy stocks erased their declines.
Currencies
Bloomberg’s Dollar Spot Index, which tracks the U.S. currency against 10 major peers, fell 0.1 percent after gaining 0.5 percent over the past three sessions.New Zealand’s dollar led an advance among the majors, adding 0.5 percent, and the Korean won climbed 0.2 percent. Australia’s dollar pared gains after the country’s central bank said there was scope for further monetary easing. Odds of a Fed rate hike this week held above 76 percent ahead of data on U.S. consumer prices due on Tuesday.
Bloomberg’s Dollar Spot Index, which tracks the U.S. currency against 10 major peers, fell 0.1 percent after gaining 0.5 percent over the past three sessions.New Zealand’s dollar led an advance among the majors, adding 0.5 percent, and the Korean won climbed 0.2 percent. Australia’s dollar pared gains after the country’s central bank said there was scope for further monetary easing. Odds of a Fed rate hike this week held above 76 percent ahead of data on U.S. consumer prices due on Tuesday.
Bonds
Yields on Australian debt due in a decade added two basis points, or 0.02 percentage point, to 2.84 percent, as rates on similar-maturity New Zealand sovereign notes climbed four basis points to 3.57 percent. Japanese bond yields were little changed at 0.30 percent.
Ten-year U.S. yields dropped one basis point Tuesday to 2.21 percent after jumping nine basis points last session. “Markets remain nervous,” Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd. said in a note to clients. “Like equities, bond markets appeared to follow oil prices movements although moves were reasonably violent.”
Yields on Australian debt due in a decade added two basis points, or 0.02 percentage point, to 2.84 percent, as rates on similar-maturity New Zealand sovereign notes climbed four basis points to 3.57 percent. Japanese bond yields were little changed at 0.30 percent.
Ten-year U.S. yields dropped one basis point Tuesday to 2.21 percent after jumping nine basis points last session. “Markets remain nervous,” Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd. said in a note to clients. “Like equities, bond markets appeared to follow oil prices movements although moves were reasonably violent.”
Commodities
West Texas Intermediate crude added 0.1 percent to $36.34 a barrel, after sinking to as low as $34.53 last session, its weakest level in more than six years. Brent crude dropped 0.1 percent to $37.88 a barrel, dropping for an eighth straight day. Leaders in the U.S. Senate from both major parties faced resistance on allowing unlimited oil exports from some Republicans and House Democrats, who were willing to discuss lifting the trade restrictions depending on what concessions they would get in exchange, a Democratic leadership aide said Monday. OPEC effectively abandoned its own production limits earlier this month, sparking the current rout in oil, which is down more than 30 percent this year.
Copper fell 0.3 percent in London. Gold for immediate delivery rose to $1,063.60 an ounce after sinking 1.4 percent last session.
West Texas Intermediate crude added 0.1 percent to $36.34 a barrel, after sinking to as low as $34.53 last session, its weakest level in more than six years. Brent crude dropped 0.1 percent to $37.88 a barrel, dropping for an eighth straight day. Leaders in the U.S. Senate from both major parties faced resistance on allowing unlimited oil exports from some Republicans and House Democrats, who were willing to discuss lifting the trade restrictions depending on what concessions they would get in exchange, a Democratic leadership aide said Monday. OPEC effectively abandoned its own production limits earlier this month, sparking the current rout in oil, which is down more than 30 percent this year.
Copper fell 0.3 percent in London. Gold for immediate delivery rose to $1,063.60 an ounce after sinking 1.4 percent last session.
To contact the reporters on this story: Emma O’Brien in Wellington at eobrien6@bloomberg.net; Nao Sano in Tokyo at nsano3@bloomberg.net To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net; Emma O’Brien at eobrien6@bloomberg.net Sarah McDonald
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