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Asia stocks to follow U.S. higher; Treasuries gain

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(Aug 21): Asian stocks looked set for gains Friday after a rise in U.S. technology shares drove the Nasdaq 100 to a record, tempering concern over a bumpy economic recovery. Treasuries climbed.

Futures pointed higher in Japan, Hong Kong and Australia. S&P 500 contracts edged up after the index posted modest gains Thursday when a rally in technology heavyweights offset a slide for energy producers and banks amid light trading volume. The benchmark shrugged off earlier weakness from disappointing jobs data. The 10-year Treasury yield fell to 0.65% and the dollar weakened. Crude oil retreated, while gold rose.

Investor demand for the profit potential of internet and software companies remains intact, with solid balance sheets and a suite of products that benefit from social distancing helping tech extend this year’s surge — the biggest among major S&P 500 groups. The industry has sustained momentum for the stock market, despite concern over lofty valuations and economic growth.

“The love for technology stocks grew as the favorite pandemic plays,” wrote Ed Moya, senior market analyst at Oanda. “No one wants to short this market, so we are seeing investors just rotate back into technology stocks today.”

Earlier Thursday, equities fell as applications for U.S. unemployment benefits unexpectedly increased, with initial jobless claims climbing to more than 1.1 million. The report reinforces forecasts that improvement in the labor market will occur in fits and starts, with the latest uptick likely representing a pause in that recovery — rather than a substantial change in direction.

On the trade front, China confirmed plans to talk with U.S. officials soon to review progress on their preliminary deal — a rare engagement between the world’s largest economies as relations deteriorate. Speaking in Arizona earlier this week, President Donald Trump said he canceled those plans because he’s unhappy with the Asian nation’s role in the Covid-19 pandemic.

These are some of the main moves in markets:
Stocks

S&P 500 futures gained 0.2% as of 7:18 a.m. in Tokyo. The gauge rose 0.3%
Futures on Japan’s Nikkei 225 advanced 0.5%.
Hang Seng futures earlier gained 0.7%.
Futures on Australia’s S&P/ASX 200 Index rose 0.2%.

Currencies

The Bloomberg Dollar Spot Index lost 0.3%.
The euro bought US$1.1862.
The yen was at 105.77 per dollar.
The offshore yuan traded at 6.0955 per dollar.

Bonds

The yield on 10-year Treasuries dipped three basis points to 0.65%.

Commodities

West Texas Intermediate crude fell 0.8% to US$42.58 a barrel.
Gold was at US$1,949.61 an ounce.–The Edge

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