(Bloomberg) — The Asian stock index was trading in a narrow range early Monday, while gold hit a record high as tensions in the Middle East boosted demand for the haven asset.
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Australian shares rose, while Japanese shares fell and Hong Kong stock futures signaled a decline. U.S. futures rose after the S&P 500 posted its sixth straight weekly gain, its longest winning streak this year after a slew of corporate results, and signs the world’s largest economy remains robust.
Financial markets are shaped by bets on the health of the US and Chinese economies on the one hand, and the impact of Middle East hostilities and geopolitics on the other. Chinese banks are expected to cut their lending rates on Monday, after the central bank cut its policy rates at the end of September. The expected decline comes as investors grow skeptical of a volatile recovery in Chinese stocks after a slew of stimulus measures.
“How impactful further easing proves to be for Chinese and Hong Kong stocks and the yuan is up for debate as market participants may be feeling a sense of policy easing fatigue,” said Chris Weston, head of research at Pepperstone Group in Melbourne.
Silver, palladium and platinum were all rose. Bullion moved higher, hitting an all-time high of around $2,725 an ounce on news that Israel is discussing its attack on Iran after a Hezbollah drone exploded near Prime Minister Benjamin Netanyahu’s private residence. Crude oil was little changed after falling 8.4% last week.
Possible escalation in Middle Eat comes as finance ministers and central bank chiefs meet in Washington this week for the annual meeting of the International Monetary Fund and the World Bank. Hanging over the meeting is the heavy war between Russia and Ukraine and the US presidential election, which will produce starkly different economic outcomes for the world.
Bitcoin flirted with $70,000, a level last seen since June, amid a surge in demand for specialty U.S. exchange-traded funds.
Malaysian politicians are bracing for protests after committing to a rollback of fuel subsidies from next year, which also risks fueling inflation. Traders will also keep a close eye on the Indonesian rupiah after new President Prabowo Subianto confirmed that Sri Mulyani Indrawati will stay on as finance minister, a sign of policy continuity in Southeast Asia’s largest economy.
Indrawati’s reappointment to Prabowo’s government “should be seen positively by markets in terms of Indonesia’s medium-term fiscal consolidation story,” Barclays Plc strategists led by Themistoklis Fiotakis wrote in a note to clients.
As for US earnings this week, Tesla Inc. faces questions about its production targets and regulatory challenges after the unveiling of its much-hyped Cybercab failed to excite investors and allay concerns about recent car sales.
Boeing Co. will also have to calm investors who are increasingly concerned about production delays, depleted financial resources and labor disputes. Striking workers will vote on October 23 to ratify a tentative agreement on a new contract the company and their union reached this weekend, including a 35% pay increase spread over four years.
Investors are positioning themselves for the US elections in about two weeks, as odds lean towards both Donald Trump’s victory in the White House and Republicans controlling Congress. Traders have already begun ramping up their investments in assets that boomed in the wake of the former president’s 2016 victory, and are now eyeing the impact on proposed policies, including an increase in trade tariffs.
Some of the major moves in the markets:
Stocks
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S&P 500 futures rose 0.1% as of 8:59 a.m. Tokyo time
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Hang Seng futures fell 0.4%
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Australia’s S&P/ASX 200 rose 0.7%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0868
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The Japanese yen was little changed at 149.60 per dollar
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The offshore yuan was little changed at 7.1163 per dollar
Cryptocurrencies
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Bitcoin rose 0.4% to $69,027.12
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Ether rose 1.3% to $2,746.97
Bonds
Raw materials
This story was produced with the help of Bloomberg Automation.
–With help from Matthew Burgess and Chris Bourke.
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