Stocks fall and gold nears high as traders eye US stimulus talks

Stocks slipped and gold hovered near a record high as investors weighed talks in Washington regarding the renewal of economic support measures.

China’s CSI 300 of Shanghai- and Shenzhen-listed stocks dropped 0.9 per cent on Thursday while Hong Kong’s Hang Seng fell 1.5 per cent. Japan’s Topix index was 0.4 per cent lower.

Futures markets tipped Wall Street’s S&P 500 to rise 0.1 per cent when US trading begins later, while London’s FTSE 100 was expected to dip 0.6 per cent.

The US Senate is locked in negotiations to extend jobless benefits that expired last month to support the US economy during the coronavirus crisis.

Mitch McConnell, the Senate’s top Republican, has said the Senate will be in session next week, delaying summer holidays in a bid to find agreement on the support package.

Investors are also looking ahead to US jobless claims data later on Thursday, which could provide the latest indication into how the world’s largest economy is recovering from the health crisis. The Bank of England’s monetary policy committee will also make its decision on interest rates, with economists polled by Bloomberg anticipating no change.

Traders in Asia will be focused on earning from Japanese blue-chips including Nintendo and Toyota.

Gold, which often serves as a haven in times of uncertainty, was up 0.2 per cent $2,043.51 a troy ounce after hitting a record high of $2,055.10 on Wednesday.

Daniel Been, head of foreign exchange strategy at ANZ, said investors had been turning to gold as it is “the last defensive asset left”.

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“People are concerned if we don’t have a renewal in the US of the jobs payments we could see further slowing in what was already a bit of a wobbly growth trend,” he said.

Overnight on Wall Street, the S&P 500 closed 0.6 per cent higher, shrugging off an employment report that suggested a recovery in the labour market had slowed following a resurgence in coronavirus cases.

“The macro outlook for the US has become muddier but not muddied enough to undermine risky assets,” said Sim Moh Siong, a currency strategist at Bank of Singapore.

The dollar index, which measures the greenback against a basket of global peers, was little changed after retreating in the previous session due to the disappointing payroll figures.

“The [dollar] should stay under pressure, as the Fed remains fearful about the economy and thus is likely to ease monetary conditions at its next meeting in September,” added Mr Sim.

Follow Hudson Lockett on Twitter @KangHexin



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