Asia Stocks Near 10-Year High; Oil Falls

Asian stocks took a breather close to the highest since 2007 after a lackluster U.S. session, and as investors awaited for more clues on global demand and U.S. interest-rate policy. Oil extended losses.

It’s been a relatively quiet start to the week for markets ahead of Friday’s U.S. inflation data that may give clues on the path of U.S. monetary policy. Japan’s Topix index retreated from a two-year high, while stocks in South Korea and Australia also declined following a muted U.S. session. The dollar fell and West Texas Intermediate crude sat below $50 a barrel.

Two Federal Reserve officials said soft U.S. inflation was a problem as they played down the risk of market disruption when the central bank starts shrinking its balance sheet. The comments on Monday by St. Louis Fed President James Bullard and Minneapolis’s Neel Kashkari marry with expectations that officials will keep interest rates on hold when they meet next month and announce the start of a gradual process to trim holdings of Treasuries and mortgage-backed securities.

Geopolitics have also been thrust back into the spotlight. North Korea condemned the latest round of United Nations sanctions and rebuffed any negotiations over its nuclear program until the U.S. ceases “hostile” policies.

The latest economic data out of China pointed to steady global demand. While exports missed economists’ estimates, rising 11.2 percent in July in yuan terms, demand for Chinese goods held up in the face of escalating tensions with the U.S.

Asian equities remain near the highest level in 10 years as the current earnings season supports the case for growth in the global economy being intact. Even the Chinese leadership’s strongest commitment yet to curb financial risks and rein in spendthrift local officials hasn’t worried global investors.


Here are the main moves in markets:

Stocks
· Japan’s Topix index fell 0.3 percent with SoftBank Group Co. declining even after profit topped estimates. Sony Corp. gained after it was added to the JPX-Nikkei Index 400. Australia’s S&P/ASX 200 Index lost 0.6 percent and South Korea’s Kospi index swung between gains and losses as did Hong Kong’s Hang Seng Index.

· Futures on the S&P 500 fell 0.1 percent as of 2:04 p.m. in Tokyo. The underlying gauge rose 0.2 percent to an all-time high on Monday, when the MSCI All-Country World Index added 0.3 percent, also closing at a record. The Dow Jones Industrial Average also finished the day at another record high.

Currencies

· The Bloomberg Dollar Spot Index fell 0.1 percent. It advanced on Monday, extending gains from Friday.

· The yen rose 0.1 percent to 110.59 to the dollar.
· The euro traded at $1.1810 after gaining 0.2 percent on Monday.
· The Aussie was little changed at 79.15 U.S. cents. It got a boost to the session’s high after July business confidence increased, according to a National Australia Bank report.

Bonds

· The yield on 10-year Treasuries were steady at 2.26 percent.
· Australia’s 10-year yield rose one basis point to 2.63 percent.

Commodities

· West Texas Intermediate crude dropped 0.3 percent to $49.22 a barrel.

· Gold rose 0.2 percent to $1,260.17 an ounce.

Source: Bloomberg

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