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Asian Equities Seen Mixed as Trump Boosts Dollar: Markets Wrap

(Bloomberg) -- Asian equities are set for a mixed open Friday, while the dollar rose after President Donald Trump waded into the unusual public discussion over exchange rates. Trump said that he favored a strong greenback, just a day after his Treasury secretary endorsed a weaker dollar as good for trade, sending the currency down.

Japanese futures were little changed from Thursday’s close while Australian futures pointed lower. Trump’s remarks arrested the dollar from a three-day tailspin, while U.S. stocks slipped and Treasuries advanced. The euro retreated from the three-year high hit after European Central Bank President Mario Draghi said robust growth had contributed to gains in the common currency. The S&P 500 closed virtually unchanged after erasing an earlier rise, with investors assessing the impact of the greenback’s gyrations on equities. Caterpillar Inc. and 3M Co. advanced on strong forecasts. In late trading, Intel Corp. rallied after topping estimates and Starbucks Corp. shares retreated.

Trump’s comments roiled a market where investors are already on edge after U.S. Treasury Secretary Steven Mnuchin and Draghi engaged in public discussions of currency levels. The volatility risks spurring a reassessment of the global risk-on rally that’s stretched valuations across asset classes.

So far, U.S. equities have continued to march higher amid solid corporate results, but rising currencies have threatened stock gains from Japan to Europe. Investors are also casting a watchful eye on the World Economic Forum in Davos, where Trump will deliver a keynote speech as his administration ramps up protectionist rhetoric.

“You tend not get too many comments on the dollar’s value from either Treasury secretaries or presidents; it’s a rare event. So the market tends to pay attention when they do happen,” Shahab Jalinoos, global head of foreign-exchange strategy at Credit Suisse, said by phone. “The market can easily imagine the idea that this White House might well change its stance on the currency.”

Terminal users can read more in our markets blog.

Here’s what to watch out for this week:

  • Trump speaks in Davos at the annual World Economic Forum.
  • The U.K. House of Lords is considering Prime Minister Theresa May’s Brexit bill this week.

These are the main moves in markets:

Stocks

  • ASX 200 futures decreased 0.2 percent.
  • Nikkei 225 futures in Osaka fell 0.2 percent.
  • Kospi futures increased less than 0.05 percent to the highest in more than 11 weeks.
  • Futures on the S&P 500 Index rose less than 0.05 percent.

Currencies

  • The Bloomberg Dollar Spot Index climbed 0.1 percent.
  • The Japanese yen was down 0.2 percent at 109.58 per dollar early Friday after tumbling by more than one yen in the wake of Trump’s comments late Thursday New York time.
  • The euro was unchanged at $1.2396.

Bonds

  • The yield on 10-year Treasuries fell three basis points to 2.62 percent.

Commodities

  • West Texas Intermediate crude fell 0.6 percent to $65.23 a barrel, the biggest fall in a week.
  • Gold was unchanged at $1,348.26 an ounce.
  • LME copper declined 0.2 percent to $7,138.00 per metric ton.

--With assistance from Samuel Potter Kailey Leinz Eddie van der Walt and Sarah Ponczek

To contact the reporter on this story: Randall Jensen in New York at rjensen18@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Christopher Anstey

©2018 Bloomberg L.P.

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