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Asia Stocks Brace for Volatility as Dollar Falls: Markets Wrap

Andreea Papuc
Employees work at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan, on Thursday, Dec. 17, 2015. Japanese stocks followed U.S. shares higher as the Federal Reserve signaled it won’t rush into further rate increases after its first such move in almost a decade. Photographer: Yuriko Nakao

Asian stocks are bracing for declines amid heightened volatility after an abrupt turnaround in Japanese benchmarks whipsawed regional equities on Thursday, and U.S. shares tumbled on tax-reform disappointments. The dollar declined.

Equity-index futures point to a weak open for markets from Tokyo to Sydney. Japan’s Topix index and the Nikkei 225 Stock Average suddenly retreated from their highest in 25 years on Thursday as investors positioned for the settlement of some derivatives. U.S. stocks fell with losses widening after the Senate revealed that its tax plan would delay cuts to the corporate rate until 2019. The yen was higher at the end of the New York session as the Bloomberg Dollar Spot Index fell for a second day.

More from Bloomberg.com: Here’s Where the GOP Tax Plan Stands Right Now

Volatility spiked as investors appear to be growing increasingly pessimistic about the prospects for meaningful fiscal reform with both houses of Congress struggling to put forward tax proposals that have reasonable chances of becoming law. The CBOE VIX Index had its biggest surge since August. The Nikkei Stock Average Volatility Index surged 23 percent on Thursday to the highest since April.

The Nikkei 225 had its biggest one-day point reversal since the U.S. election a year ago as investors closed bets ahead of Friday’s so-called special quotation of some futures and options.

President Donald Trump wrapped up his visit to Beijing with little in the way of trade concessions and no agreement on how to handle North Korea. He now heads to the Asia-Pacific Economic Cooperation summit in Vietnam. It’s been a year since Trump’s election win and investors are taking stock of his promises to get tough on trade, cut taxes and slash regulations. Meanwhile, reports of fresh arrests in Saudi Arabia’s crackdown on corruption added to geopolitical concerns.

More from Bloomberg.com: Trump's $250 Billion China Haul Features Little of Substance

Terminal users can read more in our Markets Live blog.

These are the main moves in markets:

Stocks

  • Futures on the Nikkei 225 were about 1 percent lower in Singapore. Contracts on Australia’s S&P/ASX 200 Index fell 0.5 percent and dropped 0.6 percent on the Hang Seng Index in Hong Kong.
  • The S&P 500 Index fell 0.6 percent.
  • The MSCI Asia Pacific Index gained 0.1 percent despite the pullback in Asian stocks on Thursday.

Currencies

  • The Bloomberg Dollar Spot Index declined 0.4 percent and is headed for its first weekly slide in four.
  • The yen was steady at 113.48 per dollar. It’s headed for its first weekly gain in four.
  • The euro gained 0.5 percent to $1.1648, the largest increase in three weeks.

Bonds

  • The yield on 10-year Treasuries fell less then 1 basis point to 2.33 percent.

Commodities

  • West Texas Intermediate crude increased 0.4 percent to $57.03 a barrel.
  • Gold gained 0.3 percent to $1,285.07 an ounce, the highest in three weeks.
  • Copper fell 0.3 percent to $3.09 a pound, the lowest in a month.

More from Bloomberg.com

Read Asia Stocks Brace for Volatility as Dollar Falls: Markets Wrap on bloomberg.com