Asia Stocks Stall, Yen Rises Following Trump’s Nafta Warning

Donald Trump grabbed investors’ attention in an otherwise listless Asian trading session, with the yen rising and S&P 500 Index futures slipping with the Mexican peso as the U.S. president said he may end the North American Free-Trade Agreement.

Some of the earlier risk-on trade was unwound, with the dollar pulling back after Trump also threatened to shut down the U.S. government if he is unable to get funds to build a wall along the Mexican border. Asian stocks stalled, with benchmarks coming off their highs in Tokyo and declining in Sydney and Seoul. Hong Kong’s trading session was cancelled for the day as a typhoon buffeted the city.

The risk-off reaction to Trump’s comments at a rally of his supporters in Phoenix contrasted with Tuesday’s mood on Wall Street, when stocks jumped amid optimism the president’s administration is making progress on tax reform.

There is little top-tier economic data out this week and volumes are being kept low by the Northern Hemisphere summer. The focus turns to the annual conference of global central bankers that kicks off in Jackson Hole, Wyoming, on Thursday with sentiment among investors that global policy makers seem reluctant to tighten liquidity.

Geopolitical events continue to hover in the background. Trump said during his speech that North Korean leader Kim Jong Un is beginning to respect the U.S., the latest comments that suggest his administration is moving closer to seeking talks over Pyongyang’s nuclear arsenal. The U.S. tightened its financial restrictions on North Korea, slapping sanctions on Chinese and Russian entities it accused of assisting Pyongyang’s development of nuclear weapons and ballistic missiles.

Here are the main moves in markets:

Stocks

· Japan’s Topix index rose 0.2 percent, while the Kospi index fell 0.2 percent and Australia’s S&P/ASX 200 Index declined 0.3 percent. The Shanghai Composite Index fluctuated.

· Futures on the S&P 500 Index fell 0.2 percent as of 2:50 p.m. in Tokyo. The underlying measure jumped 1 percent on Tuesday amid reports the Trump team and lawmakers may be making progress toward pro-business reforms.

· The MSCI Asia Pacific Index was little changed after rising as much as 0.3 percent.

Currencies

· The yen rose 0.1 percent to 109.45 per dollar. It lost 0.5 percent on Tuesday.

· The Mexican peso lost 0.4 percent to 17.7278 per dollar.

· The kiwi lost 0.5 percent to 72.40 U.S. cents and the Australian dollar dropped 0.2 percent to 78.94 U.S. cents after the government’s announcement a month before a general election.

· The Bloomberg Dollar Spot Index was little changed.

· The euro was trading at $1.1758.

Bonds

· The yield on 10-year Treasuries was little changed at 2.21 percent.

· The Australian 10-year bond yield climbed about three basis points to 2.68 percent.

Commodities

· West Texas Intermediate crude rose 0.2 percent to $47.71.

· Gold added less than 0.1 percent to $1,285.67 an ounce after a 0.5 percent decline.

Source: Bloomberg

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