RBNZ Leaves Rates Unchanged, but Leans Toward More “Dovish” Stance
Stocks traded lower in Asia on Thursday amid concerns over the deteriorating trade relations between the United States and China. Traders also reacted to overall weakness on Wall Street on Wednesday that was led by a steep sell-off in financial and technology stocks.
In Japan, the Nikkei 225 lost 0.45 percent on broad-based weakness. Rising crude oil prices took its toll on the airlines industry and the Topix air transport subindex which was down 1.82 percent.
In South Korea, the Kospi fell 0.59 percent with the technology sector the biggest drag on the index. China’s two major indexes finished mixed. In Australia, the S&P/ASX bucked the trend by settling up 0.24 percent. Gains were attributed to strong performances in the financials and energy sectors. The climb in crude oil prices drove the energy subindex 1.49 percent higher.
The New Zealand Dollar is trading slightly lower early Thursday after a steep sell-off the previous session. Earlier in the session, in a widely expected move, the Reserve Bank of New Zealand decided to leave its benchmark interest rate unchanged at 1.75 percent.
The tone, however, of the RBNZ rate statement suggested the central bank looks to be leaning towards a more “dovish” stance in response to weaker-than-expected growth numbers.
U.S. Equity Markets
U.S. equity futures are trading higher during the pre-market futures session early Thursday after volatile trade on Wednesday that featured dramatic moves in both directions. Shortly before the cash market opening, the blue chip Dow Jones Industrial Average rose about 286 points after U.S. plans to target foreign investment turned out less restrictive than initially thought.
The Dow, the benchmark S&P 500 Index and the NASDAQ Composite all rebounded from early losses on the news, but then reversed course as investors decided the news was not enough to diminish concerns over escalating tensions between the U.S. and its major trade partners, China and the European Union.
U.S. Treasury Yields
Despite the celebratory move in the stock market due to the headlines about the U.S. stance on foreign investment, the movement in U.S. Treasury yields strongly suggested that bond traders weren’t buying into the notion that the news was bullish.
The yield on the benchmark 10-year Treasury note held slightly lower at 2.829 percent, while the yield on the 30-year Treasury bond slipped 2.971 percent. In addition to concerns over a trade war, yields were pressured by an unexpected decline in the number of new orders for key U.S-made capital goods.