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Asian Stocks Push Higher; Yuan Holds Gains

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(Jan 14): Asian stocks followed their U.S. counterparts higher Tuesday on optimism over this week’s signing of the Sino-American trade deal. The yuan held near its highest since July.

Stocks rose in Japan, South Korea and Australia, while U.S. futures ticked higher. Earlier, technology shares sent the S&P 500 and Nasdaq Composite Index to records. Gains extended after the U.S. was reported to plan lifting the currency-manipulator label from China, a move that was confirmed after the market closed. Treasury yields extended overnight gains, while the yen fell past 110 per dollar.

The Trump administration lifted its designation of China as a currency manipulator, saying the nation has made “enforceable commitments” not to devalue the yuan and has agreed to publish exchange-rate information. The document listed no major U.S. trading partner among the 20 economies it monitors for potential manipulation.

As investors await the signing of the phase-one trade agreement on Wednesday in Washington, focus is beginning to return to corporate results. Some of the biggest U.S. banks kick off earnings season Tuesday, amid forecasts that overall corporate profits will show the smallest growth in three years.

“Our expectation is a solid earnings season — nothing extraordinary but nothing really terrible,” Kristina Hooper, chief global market strategist at Invesco Ltd., said on Bloomberg TV. “The environment is so accommodative that it really is supportive of risk assets, including equities, even if we have a lackluster earnings season.”

Elsewhere, the pound held Monday’s declines after another Bank of England official pointed to a potential vote for a U.K. interest-rate cut this month and data showed the economy unexpectedly shrank.

Here are some events to watch for this week:

    Phase one of the U.S.-China trade deal is set to be signed on Wednesday in Washington.
    The biggest American financial institutions kick off earnings season, including JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley and BlackRock Inc.
    The U.S. releases inflation data for December on Tuesday.
    The Fed’s so-called beige book is due on Wednesday.
    China GDP comes on Friday.

These are some of the moves in major markets:
Stocks

    Japan’s Topix Index rose 0.3% as of 9:05 a.m. in Tokyo.
    S&P/ASX 200 rose 0.7%.
    Kospi Index rose 0.7%.
    S&P 500 futures rose 0.2%. The S&P 500 Index increased 0.7% Monday.

Currencies

    The yen fell 0.1% to 110.05 per dollar.
    The offshore yuan was little changed at 6.8800 per dollar after rising 0.5%.
    The British pound steadied at $1.2989 after a 0.6% decline Monday.
    The Bloomberg Dollar Spot Index was little changed.
    The euro was flat at $1.1138.

Bonds

    The yield on 10-year Treasuries rose one basis point to 1.85%.
    Australian 10-year yields rose about three basis points to 1.24%.

Commodities

    Gold fell 0.3% to $1543.
    West Texas Intermediate crude was little changed at $58.14 a barrel.

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