Asian stocks declined, while the dollar built on its recent rally as investors assessed the outlook for trade and whether turmoil in some emerging markets can be contained. The pound retreated as U.K. Prime Minister Theresa May ruled out a second Brexit vote.
Stocks slipped in Japan, China and Hong Kong. The S&P 500 closed flat Friday as gains in consumer shares offset losses in energy stocks, while Treasuries posted a modest decline. U.S. markets are closed for Labor Day on Monday. South Korea’s won and Indonesia’s rupiah slid while the Aussie dropped as weak retail sales data added to worries about the domestic economy.
With U.S. stocks reaching a fresh all-time high in August and the Federal Reserve set to raise interest rates again later this month, investors are hoping the global economy can withstand shocks from trade restrictions. Emerging markets remain under pressure, with Argentina and Turkey the latest epicenters for crises denting sentiment.
“I don’t buy the ideas that valuations are cheap in these markets” Chris Weston, Head of Research at Pepperstone Financial Pty Ltd., told Bloomberg TV from Melbourne. “My view is to continue trading on the trends — staying bearish on emerging markets. We need to see a perception of the U.S. dollar going lower and clarity that the trade tensions are coming to some sort of a close. I don’t think we’re there yet.”
Elsewhere, West Texas crude was trading around $70 a barrel. The Canadian dollar slipped after Nafta talks stalled.
