* MSCI AxJ up 0.3% to two-week peak
* ASX up 1% after expansionary budget, QE hopes lift AU
bonds
* Currency, bond markets await Fed minutes
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook
SINGAPORE, Oct 7 (Reuters) - Asian stock markets hit a
two-week high on Wednesday, brushing off a Wall Street tumble
and a drop in commodity prices after U.S. President Donald Trump
abruptly cancelled talks with lawmakers on coronavirus-relief
spending plans.
Trump broke off talks with Democrats in a Tweet, saying that
negotiations will stop until after the election, when he
promised a major stimulus bill. That sent U.S stocks on their steepest drop in two weeks,
pushed oil sharply lower and lifted safe assets like the dollar
and bonds.
Investors in Asia, however, seemed less rattled, figuring
that whoever wins the U.S. presidential election will inherit an
economy hungry for stimulus and will probably apply it.
S&P 500 futures ESc1 were last up 0.2% and European
futures only slightly negative, with Euro STOXX 50 futures
STXEc1 down 0.4% and FTSE futures FFIc1 down 0.2%.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS crept 0.4% higher to a fresh two-week peak, led
by a 1.3% gain in Australia .AXJO where an expansionary budget
lifted stocks. .AX
"One way or another we're going to get some stimulus, it's
just we're not going to get it now," said ING's chief economist
in Asia, Rob Carnell. "So we'll tread water for a bit."
Currency markets and bond markets were broadly steady. The
euro EUR= held at $1.1730. The risk-sensitive Antipodean
currencies crept higher, with the Aussie AUD=D3 up 0.3% to
$0.7120 and the kiwi NZD=D3 up 0.1% to $0.6592. FRX/
The yield on benchmark U.S. 10-year government debt
US10YT=RR rose 1 basis point to 0.7536%. US/
Investors are awaiting minutes from the U.S. Federal
Reserve's September meeting due at 1800 GMT for guidance as to
how the central bank plans to push inflation higher and how long
it might let it run above 2% before tightening its ultra-loose
monetary policy.
Australian government bonds rallied in anticipation of
quantitative easing from the central bank and a lower cap on
three-year yields AU3YT=RR YTTc1 , which fell to a record low
of 0.138%. AUD/
SUBHEAD
On Wall Street on Tuesday the Dow .DJI fell 1.3%, the S&P
500 .SPX dropped 1.4% and the Nasdaq .IXIC fell 1.6%. .N
A 2% jump in Alibaba 9988.HK on Wednesday, amid small but
broad gains by China-exposed retailers and financials listed in
Hong Kong .HSI further underlined the contrast between
uncertainty in the United States and economic recovery in China.
Chinese stock, equity, currency and bond markets are closed
until Friday for a long national holiday that is expected to
drive hundreds of millions of domestic trips and a spike in
consumption, which has been a weak spot.
"China is going to lead the world out of COVID the same way
it led the world out of the (financial crisis)," said Jim
McCafferty, Joint Head of APAC Equity Research at Nomura in Hong
Kong.
"The other big market in Asia is Japan," he said. "You've
got political stability, stronger virus control...and 20% of
Japanese earnings are coming from China - I think people are
beginning to realise this."
Japan's Nikkei .N225 eased 0.2% on Wednesday, but has
avoided the selloffs that have dragged on U.S. markets in recent
weeks. .T
In commodity markets, oil futures gave up some of their
recent gains amid supply concerns.
A larger-than-expected buildup in U.S. crude stocks had West
Texas Intermediate futures CLc1 down about 1.8% to $39.95 a
barrel. Brent crude futures LCOc1 fell 1.5% to $42.03 a
barrel. O/R
Spot gold XAU= recovered slightly to $1,883 an ounce after
being whacked by a rising dollar on Tuesday.
"Trump applied the salt in the gold investor's wounds when
he pinpricked the stimulus balloon," said Stephen Innes,
Bangkok-based market strategist at FX broker Axi.
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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