Asian stocks fell with U.S. futures after a report that investigators are probing whether U.S. President Donald Trump attempted to obstruct justice. Bonds rallied after Federal Reserve Chair Janet Yellen suggested weak readings on inflation won’t persist as the central bank continued its path of tightening.
Equities in Tokyo and Sydney retreated with S&P 500 futures and the yen strengthened for a second day after the Washington Post reported that Special Counsel Robert Mueller is investigating Trump, citing unnamed sources. Australian bonds followed a rally in Treasuries as data showed U.S. consumer prices excluding volatile food and fuel had the smallest year-over-year gain since May 2015. Yellen reiterated the Fed’s intention to raise rates as data improve, even as inflation readings miss expectations.
The Fed’s actions and words struck a careful balance between showing resolve to continue tightening in response to falling unemployment while acknowledging the persistence of unexpectedly low inflation this year. Policy makers agreed to raise their benchmark lending rate for the third time in six months, maintained their outlook for one more hike in 2017 and set out some details for how they intend to shrink their $4.5 trillion balance sheet this year.
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Here are the key events investors will be watching this week:
- Central banks in Japan, Switzerland, Indonesia and Britain are also scheduled to weigh in with policy decisions this week.
- Australia reports on the jobs market Thursday.
- France reports on inflation and the U.K. releases retail sales data.
Here are the major movers:
- S&P 500 futures dropped 0.2 percent as of 9:06 a.m. in Tokyo. The gauge fell 0.1 percent on Wednesday, while the tech-heavy Nasdaq indexes retreated 0.4 percent. The Dow Jones Industrial Average edged higher to a fresh record, led by gains in Home Depot Inc. and Travelers Cos.
- Japan’s Topix declined 0.2 percent, while Australia’s S&P/ASX 200 Index fell 0.3 percent. South Korea’s Kospi was little changed.
- The yen rose 0.1 percent to 109.48 per dollar, after climbing 0.5 percent Wednesday. The Bloomberg Dollar Spot Index fell less than 0.1 percent.
- The New Zealand dollar fell 0.2 percent after data showed GDP expanded 0.5 percent in the first quarter. Economists estimated a 0.7 percent increase.
- The yield on 10-year Treasury notes was flat after dropping 8.5 basis points Wednesday to 2.13 percent, the lowest level since November.
- Australian benchmark yields lost 8 basis points to 2.32 percent.
- West Texas crude futures fell 0.4 percent to $44.55 a barrel after dropping 3.7 percent the previous session. The U.S. government reported gasoline and other petroleum product stockpiles swelled last month.
- Gold rebounded 0.2 percent to $1,263.80 an ounce, after sliding 0.5 percent the previous day.
Dollar Slips With Stock Futures While Bonds Rise: Markets Wrap – Bloomberg