© Reuters. Passersby wearing protective masks, following a coronavirus outbreak, are reflected on a screen showing stock prices outside of a brokerage firm in Tokyo
By Tom Westbrook
SINGAPORE (Reuters) – Japanese equities rose to a six-month high and the dollar came under pressure on Thursday as investors chose the positives of recent economic data and bet on China and the US holding their own. trade deal at a crucial weekend meeting.
The rally follows Wednesday’s gains in Europe and Wall Street, which left the S&P 500 () a breath away from the closing record. But futures prices suggest the latest round of optimism could lose strength on the European day.
Euro STOXX 50 futures () fell 0.1%, futures () fell 0.7% and S&P 500 futures () fell 0.1%.
“People are looking at the glass as half full and testing the waters,” said Bank of Singapore currency analyst Moh Siong Sim.
During the week, a selloff in the U.S. bond market, as investors digest the largest 10-year paper auction, raised yields enough to trigger a steep drop in gold and a decline in the yen with inflows to come. from Japan.
At the same time, the number of new daily COVID-19 infections in the United States appears to be stabilizing at around 55,000, and an unexpected rise in consumer prices last month appears to bolster confidence in the recovery.
US 10-year yields () returned slightly to 0.6638% on gold on Thursday
But the size and pace of the equity market’s gains are starting to raise some concerns. OCBC analysts in Singpore fear that a stress index launched in April has only collapsed since its inception.
“Market stress … has subsided to such a low level that we are starting to wonder if we are missing something,” wrote OCBC economist Wellian Wiranto.
“With that in mind, we magnify the tensions between the US and China that may start to be present more prominently,” he said.
The next tipping point is likely Saturday, when senior officials will meet to review the progress of the Phase 1 trade deal.
White House Economic Adviser Larry Kudlow said this week that the deal was “good now,” comments that helped the yuan hit a five-month high on Thursday as a sign of market confidence.
But China is lagging behind when it comes to agricultural products and energy purchases and, Bloomberg News reported Wednesday, will likely raise other areas of the growing two-country conflict during trade talks.
PRESSURE IN DOLLARS
Elsewhere, the optimistic mood has maintained ample pressure on the dollar. [FRX/]
Markets are still eagerly awaiting a breakthrough in the discussion on the next US stimulus package. A small sign of progress is not helping the US economy and has helped the euro () back above $ 1.18 and the pound
The Australian dollar
Australia was also the outlier in regional equity markets, with the sale of communications giant Telstra (AX 🙂 after an earnings slump dragged to the index ().
Korea’s Kospi () led gains in other markets outside of Japan, climbing 0.7% to a two-year high.
In commodities, oil mostly held on to solid overnight gains as a decline in US crude oil inventories spurred hopes that fuel demand is catching up. [O/R]
Brent crude oil futures () were 0.2% weaker at $ 45.33 a barrel, while US crude oil () fell the same margin to $ 42.60 a barrel.
Weekly US jobless claims are on the horizon at 12:30 GMT and investors expect a modest downtrend to continue.