Asia Stocks Set to Follow U.S. Slide; Dollar Gains: Markets Wrap

(Bloomberg) -- Asian stocks are set to track U.S. shares lower as investors look for details of a possible trade deal between the U.S. and China. The dollar strengthened and Treasury yields slipped.

Futures pointed to losses across the region and Australian shares ticked lower after the S&P 500 Index declined the most in a month, though the benchmark did pare the worst of its losses late in the session. Chinese assets will be in the spotlight after a report China is planning to cut the value-added tax rate that covers the manufacturing sector to support growth. The yuan held gains on reports of an imminent trade deal.

After stocks on Monday were buoyed by news that the world’s two-largest economies were close to a trade deal that could lift most or all U.S. tariffs, investors are now hungry for concrete details before they push a global equities rally further. That’s especially more urgent amid growing evidence that the trade wars are hitting the U.S. economy.

Meanwhile, China is planning to cut the value-added tax rate that covers the manufacturing sector by 3 percentage points, a person familiar with the matter said. The reduction in the highest of the nation’s three VAT brackets could be announced as soon as this week, when political leaders are gathering in Beijing for the annual National People’s Congress. Morgan Stanley estimated that could add 0.6 percent to economic growth.

Elsewhere, West Texas Intermediate crude oil climbed above $56 a barrel on signs of slowing U.S. production growth and as OPEC and its allies deepened cutbacks, while gold and copper fell.

Here are some key events coming up:

• China’s National People’s Congress opens in Beijing on Tuesday. Premier Li Keqiang will announce an economic growth target. The Chinese People’s Political Consultative Conference runs concurrently. Through March 15.
• Australia’s central bank sets policy on Tuesday, then Governor Philip Lowe will give a speech on the housing market Wednesday.
• Bank of Canada Governor Stephen Poloz is expected to keep rates on hold Wednesday due to lingering uncertainty on housing and investment, while sticking to his message that borrowing costs eventually need to head higher.
• European Central Bank policy makers are expected to leave rates unchanged amid a deteriorating outlook. President Mario Draghi will hold a news conference on Thursday after the decision.
• The U.S. jobs report Friday may show hiring moderated in February. Nonfarm payrolls may have increased by 185,000 while the jobless rate fell to 3.9 percent, according to estimates.

These are the latest moves in markets:

Stocks

• Futures on the Nikkei 225 fell 0.6 percent in Singapore.
• S&P/ASX 200 Index fell 0.1 percent.
• Hong Kong’s Hang Seng Index futures fell 0.9 percent.
• The S&P 500 lost 0.4 percent at the close in New York.

Currencies

• The Japanese yen rose 0.1 percent to 111.74 per dollar.
• The offshore yuan rose less than 0.1 percent to 6.7085 per dollar.
• Bloomberg Dollar Spot Index rose 0.1 percent.
• The euro weakened 0.2 percent to $1.1342.
• The British pound fell 0.2 percent to $1.3178.

Bonds

• The yield on 10-year Treasuries fell three basis points to 2.72 percent.

Commodities

• West Texas Intermediate crude climbed 1.3 percent to $56.42 a barrel.
• Gold declined 0.5 percent to $1,286.60 an ounce.
• Base metals tumbled. LME copper lost 1.1 percent to settle at $6,409 a ton, while LME aluminum settled 2.2 percent lower at $1,875 a ton.

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