Tribeca Investment’s Sean Fenton discusses the lack of pullbacks in the markets and what could trigger a correction.Equity markets in Asia were steady as investors awaited clues on monetary policy from heads of some major central banks and kept an eye on U.S. tax reform developments. Bond yields held recent advances.
Japan’s Nikkei 225 Stock Average closed little changed after swinging between a gain of 0.7 percent and a drop of 0.3 percent. The gauge had dropped for the past four days. Shares in China slipped after the country’s economic expansion dialed back a notch as factory output, investment and retail sales all decelerated. Australian stocks underperformed regional markets as Royal Dutch Shell Plc sold its entire stake in Woodside Petroleum Ltd., sending its shares down the most in a year.
Bond yields in Australia advanced for a fourth day after solid business confidence data that also gave a leg up to the Aussie dollar and after short-term U.S. Treasury yields climbed ahead of key U.S. economic data this week. The pound stayed weak amid renewed political pressure on U.K. Prime Minister Theresa May. Bitcoin clawed back some losses after extending its slump from last week’s record high to as much as 29 percent.
As investors continue to monitor developments on U.S. tax reform discussions, attention turns Tuesday to appearances from Mario Draghi, Janet Yellen, Mark Carney and Haruhiko Kuroda at a European Central Bank conference. U.S. inflation and retail sales numbers that could influence Federal Reserve interest-rate hike odds are on the docket later in the week.
Kuroda said in a speech at the University of Zurich’s Swiss Institute of International Studies on Monday that the BOJ would continue to persist with “powerful monetary easing” to ensure that rising inflation expectations and price increases are not cut short. Kuroda has repeatedly said that the central bank needs to continue with its stimulus, even as other central banks begin taking steps to tighten policy.
Markets have stumbled in the past week after a global rally took U.S. stocks to records and Japan’s to the highest in a quarter century. In wake of the historic gains, the California Public Employees’ Retirement System, the largest U.S. pension fund, is considering more than doubling its bond allocation to reduce risk and volatility. Ten-year Treasury yields have climbed about 40 basis points from their low this year reached in September.
Data in China Tuesday still painted a picture of an economy that keeps ticking along at a solid pace. The world’s second-largest economy is on track for its first full-year acceleration in seven years, despite the dip in the October data.
Venezuela, one of the world’s riskiest credits, was declared in default by S&P Global Ratings after missing two interest payments on its debt. The nation, home to the world’s largest oil reserves, owed investors about $200 million and failed to make those payments by the end of a 30-day grace period that expired over the weekend, S&P said in a statement in which it lowered the country’s rating to SD. – Bloomberg