Asian Stocks Set to Follow U.S. Gains; Yields Rise: Markets Wrap

Asian stocks looked set to follow their U.S. peers higher amid optimism over President Donald Trump leaving hospital and that lawmakers will move closer to providing more stimulus. Treasury yields jumped and the dollar weakened.

Futures pointed to modest gains in Japan, Australia and Hong Kong. S&P 500 contracts were little changed after U.S. stocks closed at the highest levels of the day, rebounding from Friday’s swoon in the wake of Trump’s coronavirus disclosure. Energy, health care and technology shares were the biggest gainers, pushing the benchmark index up by the most in almost four weeks. The longest-maturity Treasury yield surged to a three-month high as traders adjusted their election bets after Joe Biden’s latest poll numbers.

“Investors are likely running with the idea that recent data and President Trump’s firsthand experience with the virus increases the odds of another fiscal package,” said Adam Phillips, director of portfolio strategy at EP Wealth Advisors. “It is becoming harder to deny the need for additional fiscal support.”

Trumpleft Walter Reed hospital Monday evening and headed for the White House after being treated since Friday for Covid-19. With less than a month until Election Day, his hospitalization has jolted the presidential campaign, forcing him to scrap rallies and other events as polls show him trailing Biden nationally and in swing states.

The increased possibility that a clear winner could emerge from the Nov. 3 election has eased fears in recent weeks about a close election and the risk of a long and messy legal battle.

Elsewhere, crude oil extended gains and gold advanced. Australian assets will be in focusTuesday as the government announces its budget and the central bank decides on rates.

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Here are some key events coming up:

  • The Reserve Bank of Australia is forecast to keep interest rates and its three-year yield target unchanged at 0.25% on Tuesday
  • Also Tuesday, Fed Chair Jerome Powell and ECB Chief Economist Philip Lane deliver keynote addresses at the NABE conference
  • On Wednesday, the minutes of the Sept. 15-16 meeting of the FOMC could be especially fruitful for Fed watchers, beginning with details of the debate on conditions necessary to trigger a rate increase
  • The U.S. Vice Presidential debate takes place in Salt Lake City on Wednesday
  • Though the final formal round of talks is over, the British government expects trade negotiations to continue up to the EU summit in mid-October.

These are the main moves in markets:

Stocks

  • S&P 500 futures were little changed at 7:44 a.m. in Tokyo. The S&P 500 Index rose 1.8% Monday.
  • Japan’s Nikkei 225 futures rose 0.6%.
  • Australia’s S&P/ASX 200 futures climbed 0.4%.
  • Hang Seng futures rose 0.3%.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.5% Monday.
  • The yen was little changed at 105.75 per dollar.
  • The euro was little changed at $1.1783.
  • The British pound was little changed at $1.2984.

Bonds

  • The yield on 10-year Treasuries rose eight basis points to 0.78% Monday.

Commodities

  • West Texas Intermediate crude futures rose 0.6% to $39.46. They jumped 6.2% Monday.
  • Gold was little changed at $1,912 an ounce.

— With assistance by Vivien Lou Chen

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