Asian Morning Briefing: US Stocks Inch Up

12-Feb-2014 Intellasia | Wall Street Journal | 6:00 AM Print This Post


A day ahead of Federal Reserve Chairwoman Janet Yellen’s first congressional testimony, and with no key economic data to influence market direction, US stocks inched higher, while Treasurys and the dollar finished little changed. US oil futures settled above $100 a barrel, and gold ended at a 12-week high.


Focus in Asia remains on China’s financial system with official credit and lending data still awaited for release sometime this week. Investors already got a preview of what to expect after the country’s central bank over the weekend warned volatility in the nation’s money markets is likely to continue as China tightens its grip on “excessive” credit expansion. Japanese markets are closed Tuesday for a national holiday.


Stocks inched higher, notching their third straight gain, as investors shrugged off recent economic weakness and looked forward to this week’s testimony from Federal Reserve Chairwoman Janet Yellen.

Investors continued to grapple with signs of slowing economic growth one session after data showing that employers added fewer jobs than expected last month. But their willingness to push stocks higher late last week, and hold on to those gains Monday, was a sign that investors feel comfortable with stocks at current levels, some traders said.

“After what happened last week, the fact that stocks are holding here indicates there’s a little bit of conviction,” said Gordon Charlop, managing director at Rosenblatt Securities. “The market didn’t break down, which in some ways is probably the best thing you could have hoped for.”

No major economic data were released Monday. Investors will be focusing on the new Fed chairwoman’s testimony to Congress on Tuesday and Wednesday, though they say they expect few surprises. The Wall Street Journal reported last week that Fed officials were unlikely to alter their course of gradually paring back its bond-buying programme despite recent disappointing economic data.

Jobless claims and retail sales are due on Thursday, and industrial production and consumer sentiment are due Friday.

In corporate news, Hasbro rose as investors shrugged off the toy maker’s fourth-quarter report that missed analyst estimates.

Yelp gained after The Wall Street Journal reported that Yahoo will incorporate Yelp’s listings and reviews of local businesses into search results.

In Asian trading Monday, stocks in Tokyo and Shanghai jumped, with most of Asia rising as the region continued to recover from last week’s bruising selloff.


The dollar was nearly unchanged against the major currencies a day before Federal Reserve Chairwoman Janet Yellen testifies before Congress for the first time.

Market watchers don’t expect Yellen at either meeting to adjust the pace at which the Fed will cut its purchases of fixed-income assets in the wake of a recent string of negative economic indicators. But investors want the chairwoman to deliver a message of continuity in US monetary policy, and in regards to its programme of assets purchases, in particular, said Richard Franulovich, a senior currency strategist at Westpac Bank.

“It’s the case that we have [Fed Chairwoman Janet] Yellen speaking tomorrow, and the market is waiting for that,” Franulovich said.

Investors will also listen for confirmation that recent negative economic data points aren’t sufficient to steer the Fed from its chosen course to decrease its bond-buying programme, which has acted as a weight against the dollar’s value. The foreign exchange market has perceived any action by the central bank to wind down these purchases as positive for the dollar’s value against other currencies.


US Treasury prices ended little changed after a bumpy week as investors await Janet Yellen’s first testimony before Congress as the new Federal Reserve chief.

There were no major economic data scheduled for release Monday.

Yellen will give her first semiannual testimony on monetary policy Tuesday. The Treasury market is eager to hear from the new Fed chairwoman, especially after two weaker-than-expected payroll reports.

“Some investors are expecting a subtle shift in tone from Yellen toward greater concerns about labour-market developments and possibly a slower exit process from the Fed,” said Zach Pandl, senior interest rates strategist at Columbia Management.

But Pandl said that his firm’s view is that Yellen is more likely to show continuity with the Fed under Ben Bernanke, as she now represents the Federal Open Market Committee and probably won’t voice her own views at the hearing. “I think investors looking for a new, dovish Yellen Fed will be disappointed,” he said.


US oil prices settled at a high for the year above $100 a barrel, building on a rally that has extended for five straight sessions on lower-than-anticipated petroleum inventories.

Andy Lebow, senior vice president for energy at Jefferies Bache LLC, said oil futures have risen as a result of a sharp drop in US petroleum-product inventories, due to increased demand for heating oil and some higher-than-expected exports.

Stocks of distillates, including heating oil and diesel fuel, fell 2 percent to 113.8 million barrels in the week ended January 31, according to the Energy Information Administration. Inventories stood at their lowest end-January level since 2003.

Gold futures rose to their highest level in 12 weeks amid strong appetite from Chinese buyers and as concern about US economic health fanned demand for a haven.


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(Times in GMT, followed by country and event)

2300 NZ January QV Nationwide Residential Property Values

0001 UK CBI Economic Forecast

0001 UK January BRC-KPMG Retail Sales Monitor

0030 AUS January NAB Business Survey

0030 AUS December Housing Finance

0030 AUS Q4 House Price Indexes: Eight Capital Cities

0100 PHI December Merchandise Export Performance

1100 FRA December OECD Harmonised Unemployment Rates

1230 US January NFIB Index of Small Business Optimism

1245 US ICSC-Goldman Sachs Chain Store Sales Index

1355 US Johnson Redbook Retail Sales Index

1400 UK OECD Forecasting Errors launch

1400 US FRB Philadelphia President Charles Plosser speech in Delaware

1500 US December Job Openings & Labour Turnover Survey

1500 US December Monthly Wholesale Trade

1500 US Janet Yellen presents Monetary Policy Report to US House

1900 CAN Canadian annual federal budget presentation

2130 US API Weekly Statistical Bulletin

2200 US FRB Richmond President Jeffrey Lacker speech on ‘The Path to

2350 JPN December Tertiary Industry Index

2350 JPN December Orders Received for Machinery

2350 JPN January Money Stock, Broadly-defined Liquidity


Category: FinanceAsia

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