The dollar advanced, weighing on precious metals, as investors looked toward central bank meetings this week in the U.S. and Japan. The yen slid, while Asian stocks fluctuated after valuations rose to the highest in almost a year.
The Bloomberg Dollar Spot Index rose a second day after the S&P 500 Index ended last week at a fresh record, while gold and palladium declined. The yen weakened before a Friday policy decision, with Haruhiko Kuroda facing the most intense expectations for more monetary stimulus since his debut meeting as Bank of Japan governor in 2013. U.S. crude traded near the lowest close since May, while copper gained.
The S&P 500 swung back to gains Friday amid signs of strength in the American economy and speculation central banks will act to cushion any blow from the U.K.s Brexit vote. An increase in purchases of exchange-traded funds is seen by economists as the most likely stimulus for the BOJ to announce this week, while the Federal Reserve is expected to stand pat on interest rates. Group of 20 finance chiefs indicated concern over the anti-globalization sentiment gripping the world at a meeting in China at the weekend.
Equity markets may hold up this week ahead of the BOJ and Fed meetings on hopes that these central banks may sound dovish, Vasu Menon, vice-president for wealth management research at Oversea-Chinese Banking Corp. in Singapore, said by phone. The hope of future action from policy makers offers more support in the short term even though valuations may not be compelling.
Singapore reports on consumer prices Monday, and data on Taiwanese money supply are also due. Philippine stocks led regional gains before Rodrigo Duterte, the nations new president, gives his first state-of-the-union address.
More than four stocks rose for every three that fell on the MSCI Asia Pacific Index, with consumer shares leading gains as of 11:36 a.m. in Tokyo. The Topix index added 0.4 percent, while Australias benchmark gauge rose 0.6 percent.
Nintendo Co. was the biggest drag on the regional gauge, sinking 17 percent after saying the impact of its hit Pokemon Go app on earnings will be limited.
New Zealands S&P/NZX 50 Index added 0.7 percent to an all-time high, after climbing 2.2 percent last week. The Kospi index in Seoul slipped 0.1 percent, while stocks in Hong Kong also declined. The Asian stock measure traded at 13.4 times estimated earnings over the next 12 months, near the highest multiple since August.
Investors are placing a lot of faith in central banks and fiscal authorities to increase stimulus and improve the growth calculus, Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, said in an e-mail to clients. Equity valuations are stretched but unlike bonds they are not yet at historic extremes and given that it has historically taken three rate hikes to burst equity asset bubbles, share prices should remain elevated for a while yet.
S&P 500 futures were little changed following the benchmarks 0.5 percent advance last session to a record 2,175.03. Telephone companies and utilities drove gains, with about 82 percent of earnings so far this season exceeding estimates. Shares of Verizon Communications Inc. and Yahoo! Inc. rose at least 1 percent on Friday amid prospects the former will announce plans to buy the Internet companys core assets.
Bloombergs dollar index, a gauge of the greenback against 10 major peers, rose 0.1 percent after climbing 0.3 percent on Friday. The yen slipped 0.3 percent to 106.45 per dollar after retreating 0.3 percent last session.
New Zealands dollar weakened 0.2 percent after earlier rising as much as 0.3 percent, while the Malaysian ringgit slipped for a sixth straight day, losing 0.5 percent for the steepest decline in Asia.
The rising dollar and pullback in commodity prices could begin to increasingly cause problems in the emerging-markets complex, which has been one of the biggest winners in the post-Brexit rebound, Angus Nicholson, a market analyst in Melbourne at IG Ltd., said in an e-mail.
Sterling added 0.1 percent following Fridays 0.9 percent slide, which was spurred by reports suggesting manufacturing and services industries contracted in July.
West Texas Intermediate crude traded at $44.13 barrel after sliding 1.3 percent on Friday to its lowest settlement since May 9.
Rigs targeting oil in the U.S. rose for a fourth week to 371, the longest run of gains since August, according to Baker Hughes Inc. Money managers also added the most bets in a year on falling WTI prices during the week ended July 19, according to Commodity Futures Trading Commission figures.
The general tone for the market at the moment is soft to sideways, Ric Spooner, chief analyst at CMC Markets in Sydney, said by phone. Its being weighed down by U.S. dollar strength against a background of relatively high inventories and the fact the rig count has begun to creep up.
Gold for immediate delivery slipped 0.4 percent to $1,317.29 an ounce. Silver lost 0.6 percent, while palladium retreated 1 percent.
Copper for three-month delivery added 0.4 percent in London, as nickel and zinc gained 0.9 percent. Speculators boosted their net-long position in copper to 18,284 U.S. futures and options in the week ended July 19, according to CFTC data released three days later. Thats up from 4,868 a week earlier and was the highest since March 29.