China stocks surged and led the most of Asian shares higher on Monday, after regulators announced a long-awaited stock trading link between Hong Kong and Shanghai will start next week. The Shanghai Composite Index advanced 2.3% to the highest level since November 15, 2011, while the Hang Seng Index gained 0.8%. The so-called Stock Connect trading scheme will allow global funds to buy into an estimated $2 trillion worth of mainland stocks. It is one of China’s major efforts to open up its tightly-controlled capital markets.
Russia’s ruble rallied on Friday snapping a four-day retreat, amid mounting speculation the central bank will take new measures to help the currency recover some of the worst weekly losses in five years as geopolitical tensions worsens in Ukraine’s east. The currency traded nearly 2% higher than yesterday’s closing against both the dollar and the euro in volatile afternoon trading, after falling more than 3% against both currencies in earlier today.
The euro fell to as low as 1.2396 against the dollar, the weakest level since August 2012, as European Central Bank president Mario Draghi reassured of additional stimulus measures if needed to shore up the struggling Euro Area economy. The shared currency slid 0.4% versus the yen to 142.55 after having touched a 10-month high earlier today. With the euro at a 26-month low, the region’s high-yielding government bonds advanced on the expectation that the ECB will now be able to maneuver through significant policy easing.
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Japan’s domestic auto sales continued to fall for the third consecutive month in October, down 9.1% (y/y) from -2.8% in September, data from the Japan Automobile Dealers Association showed. Auto sales, as measured by registrations of vehicles with the government, are monitored by economists since they are the first consumer spending numbers released each month.
Gold prices traded around a 4-year low as strengthening of the dollar dampened bullion’s appeal as a hedge against risk. Gold for December settlement fell 0.1% to $1,170.66 an ounce on the New York Commodity Exchange after tumbling as much as 0.9% to $1,161 earlier today. Other precious metal also fell, with silver futures dropping as much as 2.3% to $15.74 an ounce before rebounding. Silver prices dropped last Friday to the lowest level since February 2010.
The difference between short-and long-term U.S. Treasury yields, known as the yield curve, fell to the lowest level since 2012 on speculation the Federal Reserve will hike interest rates sooner than expected while inflation remains muted. The 2-year Treasury yield rose 1 basis point to 0.49%, while the 30-year Treasury yield slid 3 basis points (bps) to 3.02%. Accordingly, the gap between them shrank to 2.53% (or 253 bps), the least level since November 2012.