Japan to Join Global Stock Selloff as Yen Jumps: Markets Wrap

(Bloomberg) -- Asian stock futures signaled the region will add to declines in global equities that’s prompted buying of safer haven assets from the yen to gold and Treasuries. The dollar dropped after Donald Trump called the U.S. currency “too strong.”

Equity-index contracts slumped in Tokyo, indicating a strong currency will continue to weigh on Japanese shares when trading gets under way. The greenback fell against most peers after Trump told the Wall Street Journal its value is too high in part because China holds down its own currency. Sterling rebounded, posting its biggest rally against the dollar since 1993, on British Prime Minister Theresa May’s plans to leave the European Union. U.S. bank shares slumped.

Politics is continuing to have a large impact on global markets with traders assessing the significance of the U.S. president-elect’s comments ahead of his inauguration on Friday. May’s confirmation that parliament will get a vote on the final Brexit deal added to the pound’s momentum against the greenback. Meanwhile trading firms are reaping the rewards from stronger currencies and bond-trading in the wake of the U.S. election, with Morgan Stanley saying momentum from a strong fourth quarter continued into the first weeks of 2017.

“Trump has made a lot of announcements but people are waiting for that to translate into implementation and some policy around that,” Paul Harris, a Toronto-based fund manager at Avenue Investment Management, told Bloomberg TV. “This is the time when you might have some slight volatility.”

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Here are the main moves in markets.

• The yen traded at 112.70 per dollar, near the strongest level since November.

• The Aussie was at 75.64 U.S. cents. Its had the best run among G-10 currencies since the start of the year, up 4.9 percent.

• The S&P 500 lost 0.3 percent. The Stoxx Europe 600 index dropped 0.2 percent after clawing back losses of as much as 0.7 percent.

• Futures on the Nikkei 225 Stock Average lost 0.3 percent in Singapore. Australia’s S&P/ASX 200 fell 0.7 percent. Futures on the FTSE China A50 index lost 0.1 percent and those on the Hang Seng rose 0.3 percent.

• The Bloomberg Dollar Spot Index retreated 1.3 percent on Tuesday to the lowest in a month. The pound surged 3.1 percent to $1.2402.

• The yield on 10-year Treasuries dropped seven basis points to 2.33 percent, after falling two basis points last week.

• Gold was steady on Wednesday after extending its winning streak to seven days, the longest since November. Bloomberg’s commodity index rose for a fifth day on Tuesday.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net. To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Jeff Sutherland

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