BofA warns Fed risks policy mistake with early rate cuts
* MSCI AxJ grinds 0.5% weekly gain, Nikkei flat
* Dollar steady as investors see risks balanced
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook and Jessica DiNapoli
SINGAPORE/NEW YORK, June 26 (Reuters) - Asian stock markets
ground higher on Friday, and are set to end a choppy week more
or less where they began it as surging coronavirus infections
cast a shadow over encouraging economic data and checked hopes
for a swift global recovery.
MSCI's broadest index of Asia-Pacific shares outside Japan
MIAPJ0000PUS rose 0.3%, for a weekly gain of around 0.5%.
Japan's Nikkei .N225 rose 1% to sit flat for the week.
Bulls seem to have the upper hand in currency markets, with
the U.S. dollar down 0.3% for the week, and riskier currencies
such as the Australian dollar marginally ahead. Majors were
steady in morning trade on Friday. FRX/
"The market probably ran ahead of itself anticipating a
smooth recovery, which has set us up for the rougher period
we're now going through," said Shane Oliver, chief economist at
AMP Capital in Sydney.
"We're stuck in a bit of a range. There's a degree of
optimism that any second wave will be offset by stimulus ... but
if we have to go back to a renewed lockdown then it's a
different story, and markets face a lot more downside risk."
The moves followed a bumpy session on Wall Street, which
finished in positive territory after a late surge led by banking
stocks. Financials caught a boost from a relaxation in some
capital requirements that ought to free up cash for lending.
NL1N2E20X2
Still, volumes were light and plenty of headwinds remain.
The governor of Texas paused the state's reopening on
Thursday as COVID-19 infections and hospitalizations surged and
the country set a new record for a one-day increase in cases.
Localised restrictions to slow the virus have now been
re-imposed in parts of Lisbon in Portugal, western Germany,
Australia's Victoria state and Beijing.
The U.S. Senate has also passed legislation that would
impose mandatory sanctions on people or companies that back
efforts by China to restrict Hong Kong's autonomy, yet another
potential Sino-U.S. flashpoint. To become law it must also pass the House and be signed by
President Donald Trump.
Hong Kong's Hang Seng index .HSI fell 0.4% in early trade
on Friday, after being closed for a holiday on Thursday. Markets
in China and Taiwan remain closed.
The U.S. Treasury market was quiet, with the yield on
benchmark 10-year Treasuries US10YT=RR steady at 0.6790%. Gold
XAU= held steady at $1,761.39 an ounce. US/ GOL/
BALANCE
The tug of war between bulls and bears this week has sent
the S&P 500 .SPX ahead by as far 1.8% and down by as much as
2.4% on the week, with Thursday's gains leaving it flat. U.S.
stock futures ESc1 were flat on Friday.
Foreign exchange markets have likewise stalled, as the
virus' progress dents confidence in bets on further gains in
hard-running riskier currencies.
"Having risen for three straight months, some payback may be
due for stocks and currencies in July," strategists at
Singapore's DBS Bank said in a note on Friday.
"We would avoid currencies – Indonesian rupiah, Australian
dollar and New Zealand dollar – that appreciated most in June
and Q2."
Moves in majors were small on Friday, with the Aussie
AUD=D3 steady at $0.6883, up 0.8% for the week, and the kiwi
NZD=D3 flat at $0.6431 and steady for the week. The Aussie has
rallied 25% from March lows and the kiwi 18%. AUD/
After a mixed bag of U.S. data overnight, with a
smaller-than-expected drop in jobless claims but robust rise in
goods orders, markets are looking for reassurance from European
confidence surveys and U.S. spending data due later on Friday.
Oil prices, a barometer of energy consumption and so the
global growth outlook, edged ahead to hold steady for the week.
U.S. crude CLc1 futures were last up 1.2% or 46 cents to
$39.18 per barrel and Brent futures LCOc1 rose 1.3% to $41.58
per barrel. O/R
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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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