Dollar Advances on Tax Cuts as Stocks Mixed

The dollar, yields and U.S. equity-index futures rallied after Senate passage of tax-cut legislation drew focus away from events in the continuing investigation into connections between Donald Trump’s aides and Russia. Asian stocks outside of Japan climbed.

The greenback recovered some of Friday’s losses, and Treasuries paced gains in yields in Asia on Monday. Equity benchmarks in Japan fluctuated, while shares across the region rose as futures on the S&P 500 Index surged. Yields on 10-year Treasuries jumped in Asian trading. Oil continued to trade around $58 a barrel.

The dollar “is looking fairly constructive at least in the near term,” Elias Haddad, senior currency strategist at Commonwealth Bank of Australia, said on Bloomberg TV. Haddad said there was “limited upside potential” for the U.S. dollar in 2018.

Global equities are heading into year-end near all-time highs as investors focus on earnings and economic growth. Washington’s influence blew a chill through Wall Street Friday on news about former national security adviser Michael Flynn’s guilty plea for lying to federal agents. President Donald Trump dismissed the relevance of the latest step in the investigation, and called on investors to sue ABC News after it misreported the timeline related to Flynn’s case. While the S&P 500 fell as much as 1.6 percent, it ended the day down just 0.2 percent.

Investors’ attention will turn this week to central bank decisions in Australia and India among others. Also in focus will be Brexit talks as they progress toward a crucial deadline. U.K. Prime Minister Theresa May heads to Brussels on Monday where she will lunch with European Commission President Jean-Claude Juncker. The U.K. is aiming to win the approval of the other 27 EU states at the leaders’ summit on Dec. 14 for talks to move on from the separation to the future relationship.

These are the main moves in markets:

Stocks

· Japan’s Topix and Nikkei 225 Stock Average both finished the session 0.5 percent down.

Australia’s S&P/ASX 200 Index was flat.

South Korea’s Kospi index rose 0.7 percent.

· Hong Kong’s Hang Seng Index advanced 0.5 percent as Chinese shares traded in the city jumped. The Shanghai Composite Index added 0.1 percent.

· Futures on the S&P 500 rose 0.5 percent. The underlying gauge fell 0.2 percent on Friday.

The MSCI Asia Pacific Index was up 0.1 percent.

Currencies

· The dollar rose against all major peers on Monday in Asia, with the Bloomberg Dollar Spot Index up 0.3 percent.

The euro lost 0.2 percent to $1.1869.

The yen slid 0.6 percent to 112.81 per dollar.

The Australian dollar fell 0.2 percent to 75.97 U.S. cents.

Bonds

· The yield on 10-year Treasuries rose four basis points to 2.40 percent, reversing a decline on Friday.

Australia’s 10-year yield rose one basis point to 2.55 percent.

Commodities

· West Texas Intermediate crude slid 0.7 percent to $57.98 a barrel.

Gold fell 0.5 percent to $1,274.69 an ounce.

Source: Bloomberg

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