Shares inch ahead in Asia, Turkish lira takes a dive

The dollar surged 4 per cent at one point for the Turkish lira to the highest in seven months amid a diplomatic spat with Washington.
The dollar surged 4 per cent at one point for the Turkish lira to the highest in seven months amid a diplomatic spat with Washington.PHOTO: REUTERS

SYDNEY (REUTERS) - Australian shares and US stock futures inched higher on Monday (Oct 9) as the flow of economic news remained generally supportive for global growth, while political uncertainty caused some early ructions in currencies.

Liquidity was lacking with Japan and South Korea on holiday and a partial holiday in the United States where stocks will be open but bonds will be closed. Chinese markets are set to re-open after a week-long break.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2 per cent, having rebounded by 1.7 per cent last week. Australian stocks also put on 0.45 per cent.

Nikkei futures added 0.1 per cent even though the cash market was shut. E-Mini futures for the S&P 500 were trading 0.07 per cent firmer, while futures for the Treasury 10-year note rose 1 tick.

Yields had initially spiked higher on Friday in reaction to firm US wage numbers, only to retreat as fresh jitters over North Korea bolstered safe havens.

Annual growth in average hourly earnings accelerated to a relatively rapid 2.9 per cent in September, though that was biased upward by bad weather.

The gain outweighed a 33,000 drop in nonfarm payrolls as hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring.

The pick up in wages boosted already high expectations that the US central bank will raise rates at its December meeting, and that further hikes are likely in 2018.

Minutes of the Federal Reserve's last meeting are due on Wednesday and may well show enough support for a move by year end. A host of Fed speeches are also due this week.

In currency markets, the dollar was a shade softer at 93.738 against a basket of competitors. It also edged down to 112.52 yen, having been as high as 113.43 on Friday.

The euro was a fraction firmer at US$1.1742, perhaps aided by TV pictures of hundreds of thousands of people in Catalonia's capital Barcelona demonstrating against moves to declare independence from Spain.

Catalan leader Carles Puigdemont is expected to address the region's parliament on Tuesday, when he could unilaterally declare independence.

Another early mover was the Turkish lira, where the dollar surged 4 per cent at one point to the highest in seven months amid a diplomatic spat with Washington.

The US mission in Turkey and subsequently Turkish mission in Washington mutually reduced visa services after a US mission employee was detained in Turkey last week.

The pound popped higher on reports British Prime Minister Theresa May could sack Foreign Secretary Boris Johnson as she tries to reassert her authority after a series of political disasters.

Sterling had been undermined by speculation that May herself could be ousted ahead of crucial Brexit talks between Britain and the EU. The initial spike could not be maintained, however, and the pound soon steadied around US$1.3083.

In commodity markets, gold held at US$1,276.45 an ounce and off a two-month low touched on Friday.

Oil prices were little changed after losses last week put paid to a five-week winning streak amid concerns of over supply.

Brent futures gained 8 cents to US$55.70 a barrel, while US crude rose 15 cents to US$49.44.