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Feb 24, 2017

Asian Markets Closing Report & U.S. Stock Market Future Indications - February 24, 2017

Kenan Machado
Shares in Asia lost ground Friday as dovish signals from the U.S. Federal Reserve weakened the dollar, with possible consequences for the competitiveness of Asian exports.
The Nikkei Stock Average NIK, -0.45%   was down 0.2% with the S&P/ASX 200 XJO, -0.79%   off 0.7%. Hong Kong’s Hang Seng Index HSI, -0.62%   was down 0.5%.
The minutes from the U.S. Federal Reserve’s latest meeting released earlier this week suggested the next interest-rate increase would come “fairly soon.” Some investors interpreted that as a dovish signal that the Fed was backing away from a rate rise in March.
The U.S. Dollar Index was flat in early Asian trade at 101.070 after slipping overnight. The dollar has perhaps lost some ground on mixed messages on tax reform from the U.S. administration, said Sean Callow, senior currency strategist at Westpac.
Yet the Australian dollar was down 0.1% against its American counterpart after touching three-month highs. Against the Japanese yen, the U.S. dollar fetched ¥112.83 in Asian morning trade.
Softer expectations for Fed rate increases have also hit U.S. Treasury yields, with that on the two-year note dropping to 1.192% from 1.224% Wednesday.
In other currency news, U.S. Treasury Secretary Steven Mnuchin backed away from labeling China a currency manipulator, saying Thursday that a decision would be reached on the matter before the U.S. Treasury makes its usual report in April.
However the Chinese currency, the yuan, barely moved on the comments.
South Korea’s benchmark stock index, the Kospi SEU, -0.64%  , declined 0.5% despite consumer confidence rising for the first time in four months, and coming off an eight-year low in January.
Trump is set to address Congress on Tuesday, and may outline some of his policy intentions. Yet there is skepticism in Asia about how helpful these policies might be.
Markets are reacting to the risk of delay in fiscal stimulus spending and the unwinding of some of the optimism that followed President Trump’s encouraging comments on tax reforms, said CMC Markets chief market analyst Ric Spooner.

Wall Street 

Sara Sjolin
Wall Street stocks looked set for a lower open on Friday, setting the Dow up to end its 10-strong streak of record closes, as investors hunted for cues that could push the markets higher.
Futures for the Dow Jones Industrial Average YMH7, -0.32%  slipped 23 points, or 0.1%, to 20,773. The Dow’s DJIA, +0.17%  gain on Thursday was its 10th in a row as well as its 10th straight record closing high — the longest such streak since 1987.
“Fresh record highs in the U.S. stock markets are no longer surprising. [On the] contrary, they gradually increase the anxiety in the market. Nobody knows when and how the reflation story [will] end,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note.
As for the other major indexes, futures for the S&P 500 ESH7, -0.36%  fell 3.80 points, or 0.2%, to 2,359.25 on Friday, while those for the Nasdaq-100 NQH7, -0.47%  lost 11.25 points, or 0.2%, to 5,320.75.
In Thursday’s action, the S&P 500 SPX, +0.04%  managed to eke out a 0.99 point gain, while the Nasdaq Composite COMP, -0.43%  ended 0.4% lower, pressured by Nvidia Corp. NVDA, -9.27%  and Tesla Inc. TSLA, -6.41%  .
For the week, both the Dow and S&P were set for gains as of Thursday’s close, while the Nasdaq was eyeing a weekly loss.
“Biding their time”: Premarket trading was muted with little in the way of top-tier earnings reports or economic releases ahead on Friday.
“It is conceivable that market participants are biding their time at this point, waiting for next week’s Fed speeches from Fed Chairwoman Yellen and FOMC member Fischer, while President Trump’s joint session before Congress on Tuesday is also highly important,” said Konstantinos Anthis, markets researcher at ADS Securities, in a note.
Investors will be listening to hear whether President Donald Trump will keep up his “highly optimistic tone” on his proposed reforms, or whether he will try to manage expectations, as Treasury Secretary Steven Mnuchin appears to be doing, Anthis said.
Read: Mnuchin in no rush to label China a currency manipulator
And see: Doubts persist about tax timing as Trump meets with CEOs
“If we don’t get further detail by the time President Trump addresses a joint sitting of Congress on Tuesday, 28th February, then the rally that we’ve seen in the past three months could become susceptible to some profit taking,” said Michael Hewson, chief market analyst at CMC Markets UK..
Trump is expected to provide details on his highly anticipated tax reform proposals in his Congress appearance Tuesday. Federal Reserve chief Janet Yellen and Fed Vice Chairman Stanley Fischer are slated to speak on Friday next week.
Read: Doubts persist about tax timing as Trump meets with CEOs
Economic news: Readings on new-home sales for January and consumer sentiment for February are both due to come out at 10 a.m. Eastern Time.
In the afternoon, the weekly U.S. oil rig count from Baker Hughes Inc. BHI, -0.96%  is scheduled for release. Last week, the closely watched report showed the tally has risen for five straight weeks, leaving the count at the highest level since October 2015.
Read: Why oil experts think OPEC’s U.S. headache won’t go away this year
Crude oil CLJ7, -0.59%  was down 0.7% at $54.07 on Friday, while Brent LCOJ7, -0.71% traded 0.7% lower at $56.40. The U.S. oil benchmark on Thursday closed at its highest level since July 2015, boosted by a smaller-than-expected rise in crude inventories.
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Stock movers: Shares of Hewlett Packard Enterprise Co. HPE, -0.48%  slumped 6.7% in premarket action after the IT company late Thursday reported lower sales than expected and slashed its earnings projections for the fiscal year.
Shares of RH RH, -3.15%  , the company formerly known as Restoration Hardware, jumped 13% premarket. The high-end home furnishings retailer late Thursday forecast higher-than-expected quarterly results.
J.C. Penney Co. Inc. JCP, -2.70%  and Foot Locker Inc. FL, -3.44%  are slated to report earnings ahead of the bell.
Other markets: Asian stock markets closed mostly lower, with Europe SXXP, -0.81%  following the same trend in the early going.
Metals rose across the board, with silver SIH7, +0.82%  on track for a ninth straight weeks of gains.
The ICE Dollar index DXY, -0.11%  was down 0.1% at 100.96.