Talking Points
- Asian stocks couldn’t get off the ground as investors looked nervously to the US
- President Donald Trump will give policy clues to Congress on Tuesday
- The US Dollar pulled back a little but remained defensive
Asian stocks got a new week off to a rocky start Monday as investors looked warily to Washington DC.
US President Donald Trump will make his keenly awaited policy speech to Congress on Tuesday, and its economic content will be of utmost importance to global markets. Treasury Secretary Steven Mnuchin said on Sunday that Mr. Trump will offer a preview of sweeping plans to cut taxes and make US companies more competitive. However, caution prevailed in the run-up, with Asian mainboards all in the red and little local economic data to lift the mood.
A weaker US Dollar didn’t help much either, taking its usual toll on Asia’s plentiful exporters. The Nikkei ended down nearly 1% and Australia’s ASX slipped too, despite a blockbuster official reading on corporate profits. The cautious mood spread to mainland Chinese and Hong Kong stocks, all of which were in the red.
The greenback hit two-week lows against the Yen on Monday, reportedly lacking support as markets awaited Mr. Trump. It recouped some ground but lacked real momentum. The British Pound Sterling was hit by worries about another referendum from Scotland on leaving the United Kingdom. The Scottish government seems increasingly confident it can win a vote for independence as the UK leaves the European Union.
Sterling’s weakness helped the broad US Dollar index to inch up as Asian trade wound down. Meanwhile gold prices were steady near 3.5-month highs and crude oil prices rose very slightly. Both the US and international Brent crude benchmarks remain stuck between production cuts from traditional major producers and an increase in US supply.
The rest of the global session offers little in terms of scheduled headlines likely to tear eyes away from the US capital. US data is quite plentiful though, with pending home sales, Durable goods orders and the Dallas Federal Reserve’s manufacturing index all coming up.
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--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
