Asian stocks drop, yen advances before Trump speech to Congress

Equities in Japan, Australia and South Korea slumped. Oil was steady, trading near US$54 a barrel, while the yen advanced for a fourth day.
Equities in Japan, Australia and South Korea slumped. Oil was steady, trading near US$54 a barrel, while the yen advanced for a fourth day.PHOTO: AFP

SYDNEY (BLOOMBERG) - Stocks in Asia fell on Monday (Feb 27) while the yen strengthened at the start of a week in which Donald Trump will stand before Congress and Janet Yellen will also speak.

Investors will be hoping for detail on the US president's spending plans as lingering concern about the timing of US fiscal stimulus weighed on the US dollar this year, testing its post-election surge. Equities in Japan, Australia and South Korea slumped. Oil was steady, trading near US$54 a barrel, while the yen advanced for a fourth day.

"We are not sure what Trump's policies are going to be and whether he's going to implement them at all," Kumar Palghat, a portfolio manager at Kapstream Capital, told Bloomberg TV in Sydney. We should get some detail from Trump's speech on Tuesday, he said.

The rally in global equities that helped push their value above US$70 trillion is losing momentum as money managers grapple with political uncertainty and the Federal Reserve's schedule for lifting borrowing costs. Markets from stocks to currencies have been subject to daily fluctuations as investors hang on each word from central bank officials and politicians.

In Trump's address before a joint session of Congress on Feb 28, the president is expected to lay out his plans for tax and health-care reform and infrastructure spending.

Investors will also be watching comments from Federal Reserve officials, including Yellen, who speaks at an event in Chicago at the end of the week.

The yen strengthened less than 0.1 per cent to 112.08 per dollar as of 9:45am in Tokyo, after a three-day gain.

The Bloomberg Dollar Spot Index climbed less than 0.1 per cent. The gauge fell 0.4 per cent last week, its first drop in three weeks.

The British pound lost 0.4 per cent after the Times of London reported that UK Prime Minister Theresa May is preparing for Scotland to potentially call for an independence referendum in March.

The MSCI Asia Pacific Index slipped 0.4 per cent, after advancing 0.5 percent last week. Japan's Topix dropped 0.9 per cent, retreating for a third day. The S&P/ASX 200 Index fell 0.3 per cent in Sydney while the S&P/NZX 50 rose 0.1 per cent.

Futures on the S&P 500 added 0.1 per cent. The Dow Jones Industrial Average closed at another record on Friday, gaining for an 11th day. The Stoxx Europe 600 Index ended flat last week after falling for three straight sessions.

WTI crude futures were steady around US$54 a barrel after falling 0.8 per cent on Friday.

Gold was little changed at US$1,257.02 an ounce. The metal jumped 1.8 per cent last week for its fourth straight weekly advanced.