Yuan Gains After PBOC Move, Asian Stocks Climb: Markets Wrap

August 21, 2018

The yuan extended gains following a rally triggered by a surprise China central bank move to make it more expensive to bet against the currency. Asian stocks advanced Monday as the earnings seasons rolls on.

The offshore yuan built on gains from Friday when the People’s Bank of China announced a rule tweak in a bid to ease pressure on the currency. Equities advanced with Hong Kong shares leading gains as investors await results from regional heavyweights HSBC Holdings Plc and Softbank Group Corp. The yield on 10-year Treasuries ticked up to 2.96 percent while the dollar was little changed.

China stepped in to try to cushion the yuan after a record string of weekly losses saw the currency closing in on the key milestone of 7 per dollar. Sentiment in U.S. equities got a boost late in Friday’s trading session as the White House said officials had held high-level talks with China about trade in the past months and were open to more discussions.

Elsewhere, the Canadian dollar erased a decline sparked by Saudi Arabia freezing all trade and investments with the country. Oil and gold advanced.

Terminal users can follow our Markets Live blog here.

Here are some key events coming up this week:

  • Earnings season includes results from: HSBC, SoftBank, Japan Post Bank, Disney, 21st Century Fox, Deutsche Telekom, China Mobile, Glencore and Adidas.
  • Tuesday brings the latest Reserve Bank of Australia meeting that is likely to produce no change in either the record-low cash rate or the long-term guidance.
  • The Bank of Japan releases a summary of opinions Wednesday from its July 30-31 meeting, at which it tweaked elements of its stimulus policy to make it more sustainable.
  • Samsung Electronics unveils its next Galaxy Note smartphone.
  • Japan announces a preliminary reading of second-quarter gross domestic product. Economists expect a solid rebound from a first-quarter contraction.
  • U.S. consumer prices probably rose in July, consistent with a pickup in inflation that’s projected to keep the Federal Reserve on a path of gradual interest-rate increases, economists forecast before Friday’s release.

These are the main moves in markets:

Stocks

  • The Topix index rose 0.2 percent as of 11:07 a.m. in Tokyo.
  • Hong Kong’s Hang Seng Index rose 1.3 percent.
  • The Shanghai Composite Index gained 0.6 percent.
  • Australia’s S&P/ASX 200 advanced 0.8 percent.
  • S&P 500 Index futures rose 0.2 percent. The S&P 500 rose 0.5 percent Friday.

Currencies

  • The yen fell 0.1 percent to 111.31 per dollar.
  • The offshore yuan rose 0.2 percent to 6.8342 per dollar after climbing 0.5 percent Friday.
  • The euro bought $1.1564.
  • The Canadian dollar was steady at 1.2999 per dollar.
  • The Bloomberg Dollar Spot Index was little changed.

Bonds

  • The yield on 10-year Treasuries nudged one basis point higher to 2.96 percent.
  • Japan’s 10-year bond yield was little changed at 0.105 percent.

Commodities

  • West Texas Intermediate crude was at $68.88 a barrel, up 0.6 percent.
  • Gold climbed 0.2 percent to $1,217.41 an ounce.
  • LME copper futures fell 0.6 percent to $6,171.50 a metric ton.

    Read more: https://www.bloomberg.com/news/articles/2018-08-05/yuan-steadies-after-pboc-asia-stocks-set-to-gain-markets-wrap