Asian stocks fluctuated at the open while the greenback extended its slide against major developed currencies after Federal Reserve Chair Janet Yellen dashed expectations on Friday that she would provide clues on monetary policy tightening.
Benchmarks rose in Tokyo and Seoul after the S&P 500 Index surged to its best week in a month on tax-reform optimism. Investors will be weighing the wider impact after Tropical Storm Harvey inundated Texas and the heart of the U.S. oil and gas industry. Crude fell after initially jumping as much as 0.7 percent after a storm that hit Texas disrupted U.S. output.
Investors this week will be eager for signs of constructive progress in U.S. politics after comments on Friday from Gary Cohn, director of the National Economic Council, cut through much of the gloom that had been generated by recent White House scuffles. Cohn said in an interview he expects tax reform to pass this year and that he didn’t intend to resign over the president’s reaction to riots in Virginia.
Treasury traders face a week headlined by Tuesday’s auction of bills that mature Sept. 29 -- the deadline Treasury Secretary Steven Mnuchin has called critical for raising the debt ceiling. They will then look forward to inflation and payrolls data that will be key for determining the Fed’s next moves. Federal Reserve Bank of Cleveland President Loretta Mester urged her colleagues to look past recent weak inflation data and to stick to their gradual pace of lifting interest rates.
On the geopolitical front, North Korea fired three ballistic missiles over the weekend and Secretary of State Rex Tillerson said on Sunday that the U.S. will continue to push for negotiations to deescalate nuclear tensions on the Korean peninsula despite the “provocative” acts.
Also at the Jackson Hole symposium on Friday, Bank of Japan Governor Haruhiko Kuroda said the recent pace of growth in the world’s third-largest economy is probably unsustainable and pledged to continue with very accommodative monetary policy “for some time” because the BOJ is far from its inflation target. – Bloomberg