(Bloomberg) -- Currency markets saw a placid start to trading early on Monday as traders monitored more signs of economies reopening around the world against a deepening of tensions between the U.S. and China.
The Australian dollar and the offshore yuan edged lower, though trading will be light with holidays in the U.S., U.K. and Singapore. The U.S. should give up its “wishful thinking” of changing China, Chinese Foreign Minister Wang Yi said, warning that American leaders are potentially pushing toward a new Cold War. All eyes will be on equities in Hong Kong, where riot police clashed with protesters marching against China’s move to crackdown on dissent, after a more than 5% hit on Friday. U.S. shares rallied into Friday’s close, when Asia equity futures climbed.
On the virus front, Japan’s government will lift the state of emergency in Tokyo, its surrounding regions and Hokkaido on Monday, NHK reported. The U.S. is considering restricting travel from Brazil, which now has the second-highest number of cases.
Fresh turmoil in Hong Kong that spilled over into street protests this weekend is threatening to damage an already souring Sino-U.S. relationship. It risks hurting sentiment and choking a rally that’s left global equities about 30% higher than the March lows, spurred by stimulus measures and optimism for a swift rebound from the virus.
“One big threat to the recovery in markets is the escalating war of words between the U.S. and China,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney. “The main focus will likely remain on continuing evidence that the number of new Covid-19 cases is slowing in developed countries, progress towards medical solutions, the reopening of economies and signs that economic activity is picking up.”
Here are some key events coming up:
U.S. markets are closed Monday for Memorial Day holiday, while the U.K. is shut for the Spring bank holiday.Earnings continue with companies including Nissan Motor, British Land, Royal Bank of Canada and HP Inc.Singapore’s parliament on Tuesday is expected to announce another stimulus package.Thursday brings the U.S. jobless claims reading for the week ended May 23.Federal Reserve Chairman Jerome Powell participates in a virtual discussion on Friday.
These are the main moves in markets:
Stocks
The S&P 500 rose 0.2% on Friday.Futures on Japan’s Nikkei 225 advanced 1.2% on Friday.Hang Seng futures climbed 0.4%.Futures on Australia’s S&P/ASX 200 Index added 1.2%.
Currencies
The yen was at 107.62 per dollar.The offshore yuan dipped 0.1% to 7.1540 per dollar.The euro bought $1.0897.The Aussie slid 0.1% to 65.34 U.S. cents.
Bonds
The yield on 10-year Treasuries fell one basis point to 0.66% on Friday.
Commodities
West Texas Intermediate crude fell 2% to $33.25 a barrel on Friday, when gold rose to $1,734.68 an ounce.
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