Asia Stocks to Trade Mixed; Treasuries Slide

Daniel Fowler
July 12, 2019

The S&P 500 eked out a third straight gain after drifting much of the session. The benchmark briefly crossed above 3,000, while the Dow Jones Industrial Average surpassed 27,000.

An early rally in USA stocks lost some steam after President Donald Trump tweeted a complaint that China is "letting us down" by not buying USA farm products. But stocks came off their highs, with financial shares leading the pullback.

Oil bulls will be encouraged by the transpiring tailwinds, including rising geopolitical tensions, a potential USA interest rate cut, and rising summertime demand, while the OPEC+ supply cuts extension effectively places a sturdier floor under Oil prices. Yields on 10-year Treasuries hit a one-month high.

Federal Reserve Chair Jerome Powell, who struck a dovish tone in questioning before a congressional panel Wednesday, is back on Capitol Hill today to answer senators' questions.

Traders have rushed to cut back Fed fee lower expectations following unexpectedly robust good points in U.S.jobs for June, with US inventory markets falling for a second straight day.

US stocks ended higher on Wednesday and the S&P 500 briefly crossed 3,000 points for the first time following Powell's remarks.

Shares of 3M fell almost 2.1 percent, as Canadian investment bank RBC Capital Markets downgraded the company's stock to "sector perform" from "outperform", due to "eroding" reputation of the USA conglomerate as a "defensive, high-quality industrial". The pound continued its rebound from a two-year low as the greenback fell.

Asian stocks surge as investors await Powell's rates cut remarks.

Iran’s defence minister says Britain’s seizure of oil tanker was threatening act
Later on Monday, the government of Gibraltar said tests have shown the tanker was fully loaded with crude oil. Reports say the Iranian vessel was travelling in accordance with worldwide law before it was taken over.

The shift back to thinking in terms of 50bp buoyed stock and bond markets once again, even though minutes of the Fed latest policy minutes were far more cautious and St Louis Fed chief Bullard restated his belief that 50bp would be too much at this point.

France's Senate gave final approval to a tax on big technology companies - many of which are US firms.

Japan's Nikkei slipped 0.1 percent. The U.K.'s FTSE 100 Index fell 0.3 per cent, its sixth consecutive decline.

The Europe gains follow healthy rises in Asia, where MSCI's broadest index of Asia-Pacific shares ex-Japan rose 1%. The Australian dollar dipped to $0.69190, the lowest in nearly three weeks after Australian consumer sentiment slummed to a two-year low, which could prompt another rate cut from the Reserve Bank of Australia and pressure the government to offer more fiscal support. The euro climbed 0.1 per cent to US$1.1259.The British pound climbed 0.3 per cent to US$1.254.

Against the yen, the dollar fell 0.3% versus the yen to 108.657, dropping against the Swiss franc to 0.9894 franc. The two-year Treasury yield, a proxy for market sentiment about interest rate policy, was last 7.5 basis points lower at 1.8297%. Worldwide benchmark Brent crude futures jumped 0.9% to $64.74 per barrel.

West Texas Intermediate crude rose 0.3% to $60.59 a barrel after surging 4.5% Wednesday.Gold futures rose 0.4% to $1,424 an ounce.

-With assistance from Ruth Carson, Chester Yung, Cormac Mullen, Gregor Stuart Hunter and Laura Curtis.

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