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Asia: Stocks mixed as sell-off eases; yuan steady

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[SYDNEY] Stocks in Asia opened mixed, following two weeks of losses driven by a backdrop of uncertain trade conditions and signs that some key economies are slowing. Treasury yields steadied just below 2.9 per cent.

US equity futures edged up with stocks in Japan, Australia and Hong Kong, while shares in Shanghai fluctuated. Treasuries held last week's gains and the yen was steady after a bout of risk aversion that hammered global equities in recent sessions. The US dollar is coming off the back of a strong week that took it to the highest in a month. Oil remains below US$52 in New York. The yuan is little changed offshore. Japanese bonds are in focus as a recent slide in yields threatens to push the benchmark 10-year bond yield below zero percent.

With global growth forecasts for 2019 being questioned amid the US-China trade tussle, investors may get some clues on the policy path from this week's Federal Reserve meeting and press conference from Chairman Jerome Powell. That's the last key event scheduled as global equities round out what's been the worst year since 2011, on course to drop about 9 per cent amid concern surrounding the earnings outlook.

"There's been a reevaluation of growth and inflation prospects over 2019 with the trade war now looking extremely negative," Steve Goldman, fund manager at Kapstream Capital, told Bloomberg TV in Sydney. "We're going to see a lot of volatility."

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This weekend brought further changes at the Trump administration. Interior secretary Ryan Zinke will leave at the end of the year amid a swirl of federal investigations. Next on the list could be homeland security secretary Kirstjen Nielsen, and the president has also mused about replacing commerce secretary Wilbur Ross, people familiar with the matter said.

Investors will keep monitoring Brexit developments after Theresa May's team pushed back against reports they are warming to a second referendum on Brexit. David Lidington, her effective deputy, and chief of staff Gavin Barwell rejected the idea of another vote after newspapers reported they'd held talks on the issue. The UK prime minister will face Parliament on Monday.

Coming Up

The Federal Reserve holds its final policy meeting of 2018 on Tuesday and Wednesday. The rate decision will be followed by a press conference with Chairman Jerome Powell.

The Bank of Japan's monetary policy decision is due Thursday, followed by a briefing from Governor Haruhiko Kuroda.

Chinese President Xi Jinping marks the 40th anniversary of Deng Xiaoping's opening of the nation's economy to the world with a keynote speech at a conference scheduled for Tuesday.

A partial US government shutdown could start this week if lawmakers and President Trump fail to resolve how much money to allocate for Mr Trump's wall along the Mexican border.

And these are the main moves in markets:

Stocks

Japan's Topix index added 0.2 per cent as of 10.31am in Tokyo.

Shanghai Composite Index was down 0.1 per cent.

Hang Seng Index up 0.1 per cent.

Australia's S&P/ASX 200 Index rose 0.2 per cent.

Futures on the S&P 500 rose 0.2 per cent. The S&P 500 Index fell 1.9 per cent on Friday.

Currencies

The yen held at 113.36 per US dollar.

The offshore yuan was steady at 6.9021 per US dollar.

The Bloomberg Dollar Spot Index ticked lower 0.1 per cent. It jumped 0.3 per cent on Friday to the highest in over a month.

The euro bought US$1.1308.

The pound was flat at US$1.2581.

Bonds

The yield on 10-year Treasuries held at 2.89 per cent.

Australian 10-year bond yield slipped two basis points to 2.44 per cent.

Commodities

West Texas Intermediate crude added 0.4 per cent to US$51.42 a barrel.

Gold slipped 0.1 per cent to US$1,237.48 an ounce.

BLOOMBERG