Asia Stock Futures Rise; Treasuries Advance

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(Sept 18): Stocks in Asia looked set for modest gains as investors awaited the outcome of the Federal Reserve’s policy meeting, where it’s widely expected to cut interest rates again. Treasuries rose.

Futures in Japan, Hong Kong and Australia all climbed after the S&P 500 closed higher. Ten-year Treasury yields fell to 1.8% and the dollar weakened after the New York Fed took action to calm money markets, injecting billions in cash to quell a surge in short-term rates that was threatening to drive up borrowing costs for companies and consumers. Oil retreated as Saudi Arabia restarted the plant damaged in a weekend attack.

“There is some recognition that there are reasons to not assume the Fed is just going to cut its way to oblivion,” Alec Young, managing director for global markets research at FTSE Russell, told Bloomberg TV. “There is less urgency than there was a couple of months ago,” though most people do still expect a quarter point cut, he added.

As U.S. policy makers get ready to decide interest rates, investors are also trying to gauge the risk of a potential oil shortage weighing on the global economy. Meanwhile, concerns linger about trade tensions, with U.S. and Chinese working-level negotiators set to resume talks in the next week, before a meeting of top officials in October.

Elsewhere, Italian bonds fell after former Prime Minster Matteo Renzi left the Democratic Party, raising the prospect of further government instability. Emerging-market stocks headed for their first decline in five sessions.

These are some key events to keep an eye on this week:

    The Federal Reserve is widely expected to lower U.S. interest rates in response to slowing global economic growth and muted inflation. Chairman Jerome Powell will hold a post-decision press conference Wednesday.
    The Bank of Japan monetary policy decision is on Thursday, followed by a briefing from Governor Haruhiko Kuroda.
    Bank Indonesia and Bank of England also decide policy on Thursday.
    Australia jobs figures are out Thursday.
    Friday is quadruple witching day for U.S. markets. When the quarterly expiration of futures and options on indexes and stocks occurs on the same day, surging volatility and trading can follow.

Here are the main moves in markets:
Stocks

    The S&P 500 Index rose 0.3%.
    Futures of Japan’s Nikkei 225 gained 0.2% in Singapore.
    Hang Seng futures earlier climbed 0.4%.
    Futures on Australia’s S&P/ASX 200 Index advanced 0.1%.

Currencies

    The yen was at 108.13 per dollar.
    The offshore yuan held at 7.0885 per dollar.
    The Bloomberg Dollar Spot Index fell 0.2%.
    The euro was at $1.1072.
    The British pound bought $1.2498.

Bonds

    The yield on 10-year Treasuries declined five basis points to 1.80%.

Commodities

    Gold was steady at $1,501.36 an ounce.
    WTI crude dropped 6.5% to $58.81 a barrel. - Bloomberg