- Asia Stocks Slump as China Shares Drop, Yen Gains
Asian stocks fell as Chinese shares slumped and the yen weighed on Japanese equities. Treasuries climbed amid increasing caution about geopolitical risks and the path of U.S. interest rates.
Chinese equities traded in Hong Kong fell toward a one-month low. Shares in Seoul extended the longest losing streak since June as tensions over both Syria and North Korea remain in focus. U.S. bond yields added to declines after Federal Reserve Chair Janet Yellen confirmed that the central bank has shifted its focus to sustaining economic gains from post-crisis healing. Oil was steady after a five-day rally, its longest stretch this year.
The White House press secretary warned Syria to stop using barrel bombs against civilians, suggesting President Donald Trump may expand the criteria for action against Bashar al-Assad’s regime after last week’s missile attack on a Syrian airbase. South Korean assets have sold off amid speculation the U.S. could make a similarly aggressive pivot when it comes to Pyongyang.
Investors are also speculating on the path for interest rates, after Friday’s weaker-than-expected U.S. jobs report. The Fed is aiming to ease back significantly this year on the level of support the central bank is providing the U.S. economy as they close in on their goals of full employment and 2 percent inflation.
“Before, we had to press down on the gas pedal trying to give the economy all of the oomph that we possibly could,” Yellen said Monday in Ann Arbor, Michigan. The Fed is now trying to “give it some gas, but not so much that we’re pushing down hard on the accelerator.”
What investors are watching:
- U.S. Secretary of State Rex Tillerson will visit Moscow this week in an effort to persuade Russia that its alliance with Assad is no longer in its strategic interest. He will also press the country to uphold an agreement it brokered during the Obama administration to remove all chemical weapons from Syria.
- Federal Reserve Bank of Minneapolis President Neel Kashkari will participate in a Q&A at a meeting of the Minnesota Business Partnership.
- The G-7 foreign ministers hold a news conference after a two-day meeting in Lucca, Italy.