Asian shares rise as investors eye effect of sell-off in US Treasuries on dollar

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Sydney — Asian shares firmed towards recent peaks on Monday as Chinese markets swung higher, while investors waited to see if the recent sell-off in longer-dated US Treasuries would extend and maybe take some pressure off the beleaguered dollar.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5% to 565.74, moving nearer to the January top of 574.52.

Chinese blue chips led the way with gains of 2%, with the country’s central bank providing more medium-term loans to the financial system.

Japan’s Nikkei dipped 0.6% after touching a six-month peak on Friday, as the country suffered its biggest economic contraction on record in the second quarter.

E-Mini futures for the S&P 500 firmed 0.39% to be just below the record close of 3,386.15.

The US second-quarter earnings season wraps up with the major retailers reporting this week, including Walmart, Home Depot and Kohls.

Politics will be a feature as the Democratic National Convention kicks off the 2020 presidential election season.

Sino-US relations remain a sticking point with US President Donald Trump on Saturday saying he could exert pressure on more Chinese companies such as technology giant Alibaba after he moved to ban TikTok.

US crude oil shipments to China will rise sharply in coming weeks, as the world’s two top economies gear up to review their January deal after a prolonged trade war.

News that the scheduled review of the US-China phase-one trade deal at the weekend had been postponed indefinitely didn’t elicit much of a reaction.

The highlight of the economic calendar will be the release of the minutes from the Federal Reserve’s most recent policy meeting.

“Market participants will be looking for insight into the details and exact timing of when the Fed’s monetary policy review will be completed, and for more clarity with respect to the potential timing and structure of any changes to forward guidance,” noted analysts at NatWest Markets.

Speculation is rife the Fed will adapt an average inflation target, which would seek to push inflation above 2% for some time to make up for the years it has run below it.

That combined with huge new debt supply caused a sharp increase in longer-term bond yields last week with 30-year yields rising 21 basis points as the curve steepened.

The lift in yields gave the dollar some respite after weeks of losses. Against a basket of currencies the dollar was a fraction lower ...
17 Aug 2020 1AM English South Africa Business News · News

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