S&P 500 flirts with fresh record high, but chip-led softness weighs
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei hits one-year high as S&P 500 reaches record
* Trump talks up progress on China trade
* EU grants UK three-month Brexit extension
* Fed seen cutting rates on Wed, focus on outlook
By Wayne Cole
SYDNEY, Oct 29 (Reuters) - Asian shares scaled a three-month
high on Tuesday after Wall Street hit all-time peaks amid hopes
of progress in Sino-U.S. trade talks and for another dose of
policy stimulus from the Federal Reserve this week.
Japan's Nikkei .N225 led the way with a rise of 0.6% to
reach ground last trod a full year ago. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS crept up 0.2%
in early trade to its highest since late July.
E-Mini futures for the S&P 500 ESc1 extended their gains
by 0.1%.
U.S. President Donald Trump said on Monday he expected to
sign a significant part of the trade deal with China ahead of
schedule but did not elaborate on the timing. The U.S. trade representative also said they were studying
whether to extend tariff suspensions on $34 billion of Chinese
goods set to expire on Dec. 28 this year. "The market appears to be interpreting the improvement in
trade talks as a positive sign that the U.S. will suspend its
planned tariffs on $160 billion of Chinese imports due to take
place in December," said Rodrigo Catril, a senior FX strategist
at National Australia Bank.
"This is a big assumption as talks could easily fail again
if both parties don't find a compromise."
On Wall Street, the S&P 500 .SPX gained 0.56% to score a
record closing peak, while the Dow .DJI rose 0.49% and the
Nasdaq .IXIC 1.01%. .N
Microsoft Corp MSFT.O climbed 2.46% after winning the
Pentagon's $10 billion cloud computing contract, beating out
Amazon.com Inc AMZN.O . Google parent Alphabet Inc GOOGL.O slipped in late NY
trade after missing analysts' estimates for quarterly profit
even though revenue growth topped expectations. ON THE FED
The embrace of risk left bonds out in the cold, and yields
on two-year Treasury notes US2YT=TWEB hit four-week highs at
1.667%. US/
Bond investors are still looking forward to a likely rate
cut from the Federal Reserve on Wednesday, though they also
suspect officials might sound cautious on moving yet further.
"Some/many Fed participants may think/hope that the October
cut will be the last of this cycle," Michelle Girard,
chief U.S. economist at NatWest Markets, said in a report.
"However, we expect weaker data over the coming months and
quarters will force the Fed to lower rates further. We look for
rate cuts in October, December, March, and June, dropping the
fed funds target range to 0.75%-1.00% by the middle of 2020."
That view is even more aggressive than the futures market,
which has 50 basis points of cuts priced in by June FEDWATCH .
Central banks in Japan and Canada also meet this week, with
talk the former might ease further if only to prevent an
export-sapping bounce in its currency.
The shift from safe havens was working to weaken the yen.
The dollar was firm at 108.98 yen JPY= , having reached its
highest in three months, and was eyeing a major top at 109.31.
It fared less well on the euro, which edged up to $1.1097
EUR= , and eased back on a basket of currencies to 97.756
.DXY .
Sterling firmed after the European Union agreed to a Brexit
delay of up to three months, while Prime Minister Boris Johnson
lost a vote to force an election on Dec. 12. The pound was last at $1.2858 GBP= , well above its low for
the month at $1.2193.
Spot gold slipped back to $1,491.43 per ounce XAU= , and
away from last week's top around $1,517.
Oil prices steadied after taking a knock from signs of
rising U.S. stockpiles. O/R
Brent crude LCOc1 futures firmed 12 cents to $61.69, while
U.S. crude CLc1 added 3 cents to $55.84 a barrel.
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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(Editing by Jacqueline Wong)