Global Stocks Mostly Higher After Wall Street Declines

20 Jan 2016 | Author: | No comments yet »

Asian equities defy Wall Street’s fall, while strong dollar hammers weak oil.

SYDNEY/SINGAPORE — Asian share markets advanced on Monday after a lacklustre start, defying a dive on Wall Street, and the price of Brent crude threatened to plumb lows last seen in 2004 on renewed concern over a global oil glut. Brent crude prices, which touched a seven-year low of $36.32 overnight, were trading at $36.47 at 2.45am GMT as production around the world remained at or near record highs. The market took a hit late Friday after the Bank of Japan announced some changes to its massive stimulus programme but stopped short of expanding the net amount of assets it buys, disappointing some who had hoped for a more aggressive move. The vote heralded weeks of talks to form a coalition government, with neither Prime Minister Mariano Rajoy’s conservatives nor left-wing parties winning a clear mandate to govern, Reuters reported. “It rather seems that the troubles for the euro area are never ending and the election in Spain over the weekend has just reminded us of this element once again,” Naeem Aslam, chief market analyst at AvaTrade, said in a note on Monday.

In individual stock news, Swedish telecom equipment maker Ericsson was one of the top performers after it said it had signed a patent license agreement with Apple that will end ongoing patent infringement issues between the companies. The Dow Jones industrial average ended Friday 2.1% weaker while the Standard & Poor’s 500 index lost 1.78% and the Nasdaq composite index fell 1.59%. Longer-dated Treasuries have been particularly popular as investors wager the Federal Reserve is well ahead of the curve on inflation after last week’s rate hike. The global background is also one of disinflation given the weakness in oil and other commodity prices and the mounting spare capacity in major exporters such as China. The resulting rally in longer-dated Treasuries has flattened the yield curve with the gap between two-year and 10-year paper shrinking to 123 basis points, the smallest since early February.

A flatter curve is bad news for bank profits since they essentially make money from borrowing short and lending long, and could be one reason U.S. bank stocks fell hard late last week.

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