* MSCI AxJ up 0.2% to two-week peak
* ASX up 0.8% after expansionary budget, QE hopes lift AU
bonds
* Currency, bond markets await Fed minutes
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook and Imani Moise
SINGAPORE/NEW YORK, Oct 7 (Reuters) - Asian stock markets
edged higher on Wednesday, brushing off Wall Street's weaker
finish, which came after U.S. President Donald Trump abruptly
broke off economic stimulus negotiations with lawmakers.
Trump cancelled talks with Democrats in a Tweet saying that
negotiations will stop until after the election, when he
promises a major stimulus bill. That sent Wall Street tumbling and safe assets like the
dollar and bonds higher. Investors in Asia, however, seemed less
rattled, holding a view that stimulus would be delayed rather
than derailed.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS crept 0.2% higher to a fresh two-week peak, led
by a 0.8% gain in Australia .AXJO where an expansionary budget
lifted stocks. .AX
Broad gains in Hong Kong .HSI lifted the Hang Seng 0.7%
while Japan's Nikkei .N225 fell 0.2%. .HK .T
S&P 500 futures ESc1 wobbled either side of flat, finding
some support from Trump tweets seeming to promise backing for
individual pieces of fiscal stimulus. The dollar was steady at
its highest level for the week so far. Oil prices slid and the
strong dollar squashed gold to a one-week low.
"There are a couple of ways we still get stimulus, but none
of them occur before the election now," said ING's chief
economist in Asia, Rob Carnell, since both contenders are
promising it.
"One way or another we're going to get some stimulus, it's
just we're not going to get it now - so we'll tread water for a
bit."
China's stock, bond and currency markets are closed for
holidays until Oct. 9.
The end to U.S. stimulus talks comes as a few wobbles hit
the world's coronavirus recovery. U.S. hiring is slowing and on Tuesday U.S. Federal Reserve
Chair Jerome Powell warned of the risks if authorities did too
little to support the economic rebound.
"The risks of overdoing it seem, for now, to be smaller,"
Powell said. "Even if policy actions ultimately prove to be
greater than needed, they will not go to waste." U.S. markets, which have rallied for a few weeks on hopes of
a breakthrough in stimulus talks, tanked on Tuesday. The Dow
.DJI fell 1.3%, the S&P 500 .SPX dropped 1.4% and the Nasdaq
.IXIC fell 1.6%. .N
COUNTING DOWN THE MINUTES
The flight to safety overnight partially unwound what had
been the steepest U.S. bond market selloff in about a month. The
yield on benchmark 10-year U.S. government debt US10YT=RR fell
two basis points to 0.7403%. US/
Currency traders also bought back dollars, pushing the
dollar index =USD to its highest since late last week and
leaving both foreign exchange and bond markets delicately poised
ahead of the release of Fed minutes at 1800 GMT. FRX/
Investors are watching for clues as to how Fed members are
thinking about the central bank's new and more accommodative
approach to inflation and what they might do to boost it.
"We think the risks lie more in the extent of disagreement
within the FOMC than on the any potential dovish surprise," said
Standard Chartered Bank's head of FX research, Steve Englander.
The risk-sensitive New Zealand dollar NZD=D3 sat at a
one-week low of $0.6577. The euro EUR= was marginally lower at
$1.1725.
The Aussie AUD=D3 also touched a week-low $0.7095 and
Australian government bonds rallied across the curve, as
investors bet a dovish tone from the central bank foreshadowed
further monetary easing and perhaps more bond buying. AUD/
Jitters remained in commodity markets, with oil futures
giving up some of their recent gains made amid supply concerns.
A larger-than-expected buildup in U.S. crude stocks had West
Texas Intermediate futures CLc1 down about 2% to $39.91 a
barrel. Brent crude futures LCOc1 fell 1.5% to $42.01 a
barrel. O/R
Spot gold XAU= was steady at $1,879 an ounce after being
whacked by a rising dollar overnight.
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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