Asian stocks were mixed, U.S. equity futures pared gains and the yen retraced losses as traders assessed the likelihood the fallout of an American-led strike on Syria could be contained. Treasuries declined.
Japanese and Australian shares rose while those in Hong Kong and China fell. The yen, a proxy for risk aversion, recovered from morning lows as polls showed falling support for Japanese Prime Minister Shinzo Abe’s government, which has favored a weaker currency. The dollar remained under pressure as CFTC data showed hedge funds are the most bearish on the greenback in five years. U.S. 10-year Treasury yields ticked higher.
“There was a significant fear of potential escalation; that hasn’t happened so far,” said Callum Henderson, a Eurasia Group managing director in Singapore. Even so, “it remains to be seen how long this market rally lasts on the back of this specific factor — whether or not, or when, Russia retaliates,” he said on Bloomberg Television.
U.S. President Donald Trump declared “mission accomplished” via Twitter on Saturday, a day after the U.S., France and the U.K. launched military strikes in response to Syrian leader Bashar al-Assad’s suspected chemical attack on civilians. While geopolitical concern linger, focus this week is back on earnings season in the U.S. and a slew of Federal Reserve officials who are due to speak, including the incoming head of the New York Fed, John Williams.
Elsewhere, oil fell back below $67 a barrel amid higher production concerns. Gold extended Friday’s gains.
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Here’s what to watch out for this week:
- Goldman Sachs Group Inc. and Morgan Stanley among companies reporting results
- John Williams, soon to be president of the New York Fed, speaks on economic outlook in Madrid on Tuesday.
- China GDP and Japanese inflation are the featured data points in Asia.
- Trump welcomes Japan Prime Minister Shinzo Abe to Mar-a-Lago on Tuesday. North Korea and trade will probably be discussed.
- Mining investors will get to take the pulse of the global industry this week, with Vale, Rio Tinto and BHP offering quarterly production reports.
Here are the main moves in markets:
- Japan’s Topix index nudged 0.1 percent higher as of 10:36 a.m. in Tokyo.
- Australia’s S&P/ASX 200 Index gained 0.5 percent.
- Kospi index was flat.
- Hong Kong’s Hang Seng Index fell 0.3 percent and the Shanghai Composite Index was down 0.2 percent.
- Futures on the S&P 500 Index gained 0.4 percent. The underlying gauge fell 0.3 percent Friday.
- The MSCI Asia Pacific Index rose less than 0.1 percent.
- The Japanese yen was little changed at 107.37 per dollar.
- The euro rose less than 0.1 percent to $1.2337.
- The British pound increased 0.1 percent to $1.4256.
- The Bloomberg Dollar Spot Index was little changed after falling 0.5 percent last week.
- The yield on 10-year Treasuries rose one basis point to 2.84 percent.
- The Australian 10-year bond yield gained one basis point to 2.75 percent.
- West Texas Intermediate crude lost 0.9 percent to $66.78 a barrel.
- Gold rose 0.1 percent to $1,347.58 an ounce.
— With assistance by Ivan Levingston