SYDNEY: Stocks in Asia looked set for modest declines as haven assets from Treasuries to gold resumed rallies amid doubts over the pace of Federal Reserve rate cuts and warnings about global growth.
Futures dipped in Japan and Australia and were flat in Hong Kong. The S&P 500 swung between gains and losses before rising into the close for a second straight all-time high. The 10-year Treasury yield slumped to 1.97% and gold rose back above US$1,400 an ounce. Oil edged up from its lows, after plunging more than 4% in New York, as an industry report showed a contraction in US crude supplies. US markets will shut early Wednesday prior to the Independence Day holiday.
US-China talks are headed in the right direction, but will take time, President Donald Trump’s trade adviser Peter Navarro told CNBC. Bank of England Governor Mark Carney warned that rising protectionism risks a “widespread slowdown” to the global economy that may require a major policy response. Next up comes data on private hiring, factory orders and the services sector on Wednesday, with June’s government jobs report coming Friday.
“Much depends on a resolution on US-China trade,” Mark Kiesel, global credit chief investment officer at Pacific Investment Management Co, told Bloomberg TV. “If we don’t get resolution on the trade front with China, that will bias the Fed towards not only cutting 25 basis points but then likely having an easing bias for the rest of the year.”
Meantime, Christine Lagarde was nominated to succeed Mario Draghi as president of the European Central Bank when his eight-year term ends on October 31. Elsewhere, Trump said he’s planning to nominate Christopher Waller and Judy Shelton to serve on the Federal Reserve Board.