Australian stocks fall with US futures as dollar maintains gains
WELLINGTON, Oct 17 — Shares and debt in Australia retreated with futures on the S&P 500 Index, while the dollar extended gains against the pound as the case for a US interest-rate increase this year solidifies. Oil declined.
Australia’s S&P/ASX 200 Index fell with equities in New Zealand as 10-year bond yields in both countries rose by three basis points.
The greenback rose for a second session versus sterling, with bets on a rate increase from the Federal Reserve by year-end up two percentage points from a week ago to 66 per cent. Nikkei 225 Stock Average futures signaled gains following a retreat in the yen as gold nursed losses. Crude extended its drop into a second day.
Investors are focused on US data and Fed rhetoric, with speculation the world’s biggest economy is strong enough to warrant a rate rise before the year is out supporting the greenback. Fed Vice Chair Stanley Fischer speaks in New York Monday, after Chair Janet Yellen said little to alter the view that policy tightening is imminent in a speech at the end of last week.
The steepest increase in US retail sales in three months helped burnish market sentiment Friday, along with better-than-expected bank earnings. A slew of company results are due this week, along with an update on third-quarter gross domestic product out of China.
“Caution will prove constructive for the period ahead,” Matthew Sherwood, head of investment strategy in Sydney at Perpetual Ltd, which manages about US$21 billion (RM88.4 billion), said in an e-mail.
“The key macro variables for the current season are set to be higher oil and the dollar. They key will be the outlook statements and whether corporate leaders see some light at the end of a very dark and extended tunnel.”
Both Indonesia and Singapore report on trade Monday, with Japanese factory output and data on Philippine remittances also scheduled. Later on, the euro area updates on consumer prices. China may issue data on money supply and lending, ahead of Wednesday’s GDP numbers.
The S&P/ASX 200 dropped 0.3 per cent as of 8:30am Tokyo time, declining for a fourth day with Crown Resorts Ltd leading a slump in gaming companies after Chinese authorities detained 18 of its employees including the head of its international high-roller operations.
New Zealand’s S&P/NZX 50 Index, the first major stock gauge to start trading each day, fell 0.7 per cent, after ending last week down 0.5 per cent.
Futures on the S&P 500 Index dropped 0.3 per cent to 2,121.50 early Monday, after the US benchmark closed Friday little changed.
Banks rallied last session after earnings from JPMorgan Chase & Co and Citigroup Inc beat estimates, while data showed US wholesale prices rose more than projected. Boston Fed Bank President Eric Rosengren said the central bank may have to raise rates faster than the market forecasts.
“The domestic numbers are going to be important for the Fed, that’s what they care about, and they continue to line up nicely for a Fed rate hike,” Matt Maley, an equity strategist at Miller Tabak & Co LLC in New York, said on Friday.
Nikkei 225 futures were bid up 0.1 per cent to 16,860 in the Osaka pre-market, while Singapore-traded contracts on the Japanese index dropped 0.1 per cent to 16,835. Yen-denominated Nikkei 225 futures were down 0.2 per cent on the Chicago Mercantile Exchange to 16,840 after rising 0.6 per cent on Friday.
Futures on the Kospi index in Seoul — which slid more than 1.5 per cent last week amid a selloff in biggest stock, Samsung Electronics Co — were little changed. In Hong Kong, Hang Seng and Hang Seng China Enterprises Index futures gained at least 0.3 per cent as those on the FTSE China A50 Index added 0.1 per cent on Friday.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose less than 0.1 per cent, following Friday’s 0.4 per cent climb to its highest close since March.
The yen, which typically moves at odds with Japanese equities, was steady at 104.12 per dollar, following last session’s 0.5 per cent retreat, while the pound was down at least 0.2 per cent with Australia’s dollar.
South Africa’s rand strengthened 0.3 per cent following a two-day drop as Finance Minister Pravin Gordhan garners more support from senior government officials in the face of fraud charges. — Bloomberg