Asia stocks: Stocks gain, Treasury yields rise, yen retreats

Japanese and South Korean stocks climbed on June 10, 2019, as did crude oil prices.
Japanese and South Korean stocks climbed on June 10, 2019, as did crude oil prices.PHOTO: AFP

TOKYO (BLOOMBERG) - Asian stocks and US equity futures climbed on Monday (June 10) after President Donald Trump suspended his plans for tariffs on Mexico. Treasuries dropped and the yen retreated as demand for havens sank.

The Mexican peso jumped the most in almost a year after the US-Mexico agreement that was unveiled late Friday. Japanese and South Korean stocks climbed, as did crude oil prices. Chinese markets will re-open after a holiday Friday, when People's Bank of China governor Yi Gang said in an interview that there's "tremendous room" to ease monetary policy if the trade war deepens. Australia's markets are closed for a holiday Monday.

Investor attention on the trade front may now focus on China, with the "main progress" in US-China talks reliant on Mr Trump and Xi Jinping at the G-20 summit late this month, Treasury Secretary Steven Mnuchin said. For their part, G-20 finance chiefs over the weekend warned about escalating risks to growth from trade and geopolitical tensions.

"The focus will now shift back to the G-20 and China," strategists at TD Securities including Richard Kelly wrote in a note. "Despite the positive result with Mexico, the US-China trade dispute is a different creature, and tensions remain high."

US stocks on Friday closed out their best week since November after the American jobs report for May showed employers added the fewest workers in three months and wage gains cooled -- bolstering bets on easier monetary policy. Fed funds futures show a quarter-point cut almost fully priced in for July.

On the geopolitical front, Hong Kong's Beijing-backed government faced new pressure to withdraw legislation easing extraditions to China after as many as 1 million people turned out to oppose the measure.

Here are some key events coming up:

On Monday, British lawmakers quiz Huawei executives on security as the UK weighs whether to allow the Chinese giant to have a role in next-generation broadband networks.

Japanese Prime Minister Shinzo Abe visits Iran on Wednesday, where he'll meet Iran's Supreme Leader Ayatollah Ali Khamenei.

ECB president Mario Draghi speaks at a conference in Frankfurt.

A key measure of US inflation, the consumer price index, is also due Wednesday.

The race to succeed Theresa May heats up with the first Conservative Party leadership ballot Thursday.

Euro-area finance ministers meet in Luxembourg Thursday. On the agenda: financial penalties for Italy over its debt load, and the euro-area budget.

China and the US release industrial production, retail sales data Friday.

And these are the main moves in markets:

Stocks

Japan's Topix Index rose 1 per cent as at 9.13am in Tokyo.

South Korea's Hang Seng rose 0.6 per cent.

Hang Seng futures fell 0.2per cent earlier.

S&P 500 futures rose 0.4per cent. The S&P 500 rose 1.1per cent Friday.

Currencies

The yen fell 0.2per cent to 108.43 per dollar.

The euro was little changed at US$1.1323.

The offshore yuan was at 6.9432.

Mexico's peso jumped 1.9 per cent to 19.29 per dollar.

The Bloomberg Dollar Spot Index was little changed after dropping 0.3 per cent Friday.

Bonds

The yield on 10-year Treasuries rose about four basis points, to 2.12 per cent.

Japan's 10-year yield was at negative 0.12 per cent.

Commodities

West Texas Intermediate rose 0.8 per cent to US$54.44 a barrel.

Gold fell 0.4 per cent to US$1,335.66 an ounce.