Crude oil futures took back some lost ground after skidding on news of a large weekly build in USA crude and distillate stockpiles and a smaller-than-expected drawdown in gasoline.
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Europe is also poised for slight declines, with financial spread-betters expecting Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 to all open down 0.2 percent.
“The latest United Kingdom manufacturing survey could well assuage some concerns about the health of the United Kingdom economy in the wake of the recent Brexit vote, if as expected we get a rebound from July’s disappointing 48.2 reading, with an August rebound to 49.1 expected”, wrote Michael Hewson, chief market analyst at CMC Markets in London.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 0.42 points, or 0.03 percent, to 1,329. 96.
Investors awaited China’s official manufacturing Purchasing Managers’ Index (PMI) as well as a private gauge later this session. “It did not give much of a lift to Japanese markets, for which US markets are a bigger factor”.
Suga’s comments followed remarks from Bank of Japan Governor Haruhiko Kuroda, who said on Saturday that the central bank would not hesitate to approve more quantitative easing or lower interest rates further into negative territory to tackle the economic challenges Japan faced.
The dollar rose a third of one per cent against the yen to a one-month high of 103.34 yen, and the euro slipped to $1.1130.
Benchmark 10-year U.S. Treasury yields were up 1 basis point at 1.58 per cent, bringing the increase over August up to 12 basis points, the most since June last year.
Focus is now on Friday’s U.S. August non-farm payrolls report, which should indicate whether the U.S. economy is robust enough to withstand monetary tightening.
The ADP report comes ahead of the closely watched USA nonfarm payrolls report due out Friday that could prompt an interest rate hike by the Fed.
The ADP National Employment Report yesterday showed United States private employers adding 177,000 jobs in August, slightly above the 175,000 forecast by a Reuters survey of economists, and contracts to buy previously owned homes surged in July.
Brent crude futures added 0.2 per cent to US$47.00 per barrel, after falling 2.8 per cent overnight but still gaining 11 per cent for August.
US crude was down 0.5 per cent at $46.12 after losing 1.3 per cent overnight.
The notable gainer was German bank Commerzbank, whose shares rose as much as 4 per cent after a German magazine reported that the country’s biggest lender Deutsche Bank had in the past considered the idea of a merger with Commerzbank.
Spot gold edged up 0.3 per cent to $1,313 an ounce after tumbling to as low as $1,308.65 on Tuesday, its lowest since late June, pressured by the stronger dollar and growing expectations of higher US rates.
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