Asia markets dive as volatility sweeps globe ahead of Fed meeting

HONG KONG - Asian markets plunged Tuesday following a highly volatile day on Wall Street fuelled by fears about the Federal Reserve's plans to hike interest rates, with attention lasered on its upcoming two-day policy meeting.

A disappointing start to the corporate earnings season, as well as growing concern about Russia's troop build-up on Ukraine's border and warnings of a possible invasion were also dragging on sentiment.

After spending much of last year playing down the spike in prices, the US central bank has in recent months taken a sharp hawkish turn on monetary policy as officials look to bring inflation -- which is at a four-decade high -- under control.

Minutes from the most recent meeting indicate it will begin lifting interest rates from March with three or possibly four more hikes before the end of the year. On top of that, it plans to start offloading its vast bond holdings.

But while the move to battle runaway prices is seen as crucial, the end of the era of ultra-cheap cash for investors has rattled markets after almost two years of uninterrupted gains to record or multi-month highs.

All attention is on the Fed gathering that starts later in the day, with investors poring over every word from the bank's statement and boss Jerome Powell's subsequent news conference.

"The Fed is scrambling to control inflation and markets have gone from expecting a gradual interest rate hiking cycle to an accelerated tightening action until inflation eases," said OANDA's Edward Moya.

"Some economists think the Fed needs a half-point rate increase in March to show they are serious about tackling inflation and signal that more are coming."

He added that officials need to "send a message they are tackling inflation, but they don't need to overcommit themselves. The Fed's best option is to signal they will raise rates by 25 basis points in March and signal another one is coming in May. Inflation may show its peak around then and they may not need to be as aggressive going forward."

Wall Street's three main indexes have had a particularly rough time, with the Nasdaq down more than 10 percent from recent peaks, putting it in correction territory.

And on Monday they saw some wild gyrations, suffering intra-day losses before dip-buying saw them all surge in the last hour to end in positive territory.

London, Paris and Frankfurt tanked Monday, without enjoying any recovery, with eyes on eastern Europe as the United States said 8,500 troops were put on standby for possible deployment to boost NATO as fears grow that Russian President Vladimir Putin is planning to invade Ukraine.

But all three markets rose in opening trade Tuesday.

"Volatility is back," Lori Calvasina, at RBC Capital Markets, told Bloomberg Television. "We're having a sea-change in terms of Fed policy. Equity investors frankly have been behind the curve in anticipating what's coming, so there's a lot of catch-up to do."

Asia spent all Tuesday well in the red with Tokyo down 1.7 percent as Hong Kong shed 1.7 percent, while Singapore, Taipei and Jakarta were also off more than one percent.

Sydney shed 2.5 percent after higher-than-forecast Australian core inflation figures ramped up bets on a rate hike by the country's central bank. 

Shanghai and Seoul fell more than two percent, with Wellington, Mumbai and Bangkok also down.

While there is a general consensus that the long-term outlook for markets remains positive -- thanks to reopenings, vaccination programmes and the less-severe Omicron variant -- many also warn of more near-term upheaval.

Jeremy Siegel, at the Wharton School of the University of Pennsylvania and author of "Stocks for the Long Run", said: "I'm still very positive on long-term equities but I think it's in for a rocky time the next two or three months.

"We have to get used to the fact that the Fed is going to be much more hawkish."

Agence France-Presse

Asian shares on edge as day of Fed chair speech arrives

HONG KONG - Asian shares were mixed on Friday morning as slight gains in China were balanced by declines elsewhere and investors globally turned cautious ahead of a long-awaited speech by Fed Chair Jerome Powell.

Remarks from the Federal Reserve's more hawkish policy makers and a deadly attack in Afghanistan also subdued sentiment and helped the dollar gain against a basket of its peers.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.1% while Japan's Nikkei shed 0.46%.

Australian shares fell 0.18%, and Hong Kong and Korea were flat.

However, in a reversal of recent weeks where Chinese stocks weighed on the region, Chinese blue chips gained 0.57% after China's central bank made its biggest weekly cash injection into the banking system since February.

"There are three things that are conspiring at the moment to sap sentiment," said Kyle Rodda, an analyst at IG markets. 

He was referencing a weak lead from Wall Street after the attack in Afghanistan, the fact Asian markets had been lagging this week because investors were nervous about the potential for future regulatory crackdowns in China, and caution ahead of the upcoming Jackson Hole Symposium.

Powell is set to speak at 1400 GMT in the Kansas City Fed's central banking conference, an event normally held in Jackson Hole, Wyoming, which has been often used by Fed policymakers in the past to provide guidance on their future policy.

Traders will analyze Powell's words for any hints about when the Fed will begin tapering its asset purchasing program.

Analysts at RBC said in a note that while much of the summer had been spent waiting for the event, there was "skepticism that the Fed will provide more specific information around a timetable... amidst a rise in Delta variant COVID cases."

Islamic State struck the crowded gates of Kabul airport in a suicide bomb attack on Thursday, killing scores of civilians and at least 13 U.S. troops.

This, along with public remarks by the U.S. Federal Reserve's hawkish wing urging the central bank to begin paring bond purchases contributed to Wall Street closing slightly lower, ending a streak of all-time closing highs.

The Dow Jones Industrial Average fell 0.54%, the S&P 500 lost 0.58%, and the Nasdaq Composite dropped 0.64%.

Dallas Fed President Robert Kaplan said he believed the progress of economic recovery warrants tapering of the Fed's asset purchases to commence in October or shortly thereafter, following earlier comments from St. Louis Fed President James Bullard, who said the central bank was "coalescing" around a plan to begin tapering.

Early in Asian hours, U.S. stock futures, the S&P 500 e-minis, were flat.

The yield on benchmark 10-year Treasury notes was 1.3441% down from a two-week high of 1.375% set the day before, as traders were cautious ahead of Powell's speech.

The dollar when measured against a basket of currencies has gained a little from Thursday's lows. The euro traded at $1.1747, having eased from the previous day's high of $1.1779 as a survey showed weaker consumer sentiment in Germany.

U.S. crude ticked up 0.34% to $67.65 a barrel. Brent crude rose 0.25% to $71.27 per barrel, resuming this week's rally after taking a rest on Thursday, as energy companies began shutting production in the Gulf of Mexico ahead of a potential hurricane forecast to hit on the weekend

-reuters 

Japan shares clear 18-year peak, dollar firm

SYDNEY - Asia shares were trying to score a sixth session of gains on Wednesday as investors chose to be optimistic on the chances of a Greek debt deal, while the dollar held firm as the prospect of U.S. rate rises came back into view.

Japan's Nikkei led the way as a rise of 0.5 percent cleared a peak from 2000 to reach ground last trod in late 1996.

MSCI's index of Asia-Pacific shares outside Japan edged up 0.13 percent to bring its gains over the past six sessions to about 2.9 percent.

In China, official efforts to calm jittery investors seem to have steadied sentiment after steep losses last week. Shanghai stocks were up 1.6 percent but trade remained volatile.

Gains on Wall Street had been minor, though still enough to see the Nasdaq to a record peak. The Dow ended Tuesday up 0.13 percent, while the S&P 500 added 0.06 percent and the Nasdaq 0.12 percent.

Risk appetites were whetted after Greece's leftwing government expressed confidence that parliament would approve a debt deal with lenders, despite an angry reaction from some of its own lawmakers.

EU finance ministers meet on Wednesday to discuss whether or not to put the plan to euro zone state heads. If it goes ahead, the Greek parliament could vote as early as this weekend.

Bond investors were encouraged enough to push down yields on Greek 10-year debt by 60 basis points, with yields in Italy and Portugal following.

Yields went the other way in the United States following a string of generally upbeat economic data and comments from Fed Governor Jerome Powell that the economy could be ready for interest rate increases in both September and December.

That was unwelcome news for debt markets which are priced for only one hike this year. Yields on 10-year Treasury notes duly rose to their highest in 1-1/2 weeks at 2.43 percent.

"Markets appear to have interpreted the prospect of a deal between Greece and its creditors as removing a source of uncertainty, which may allow the Fed to commence hiking interest rates in September," said analysts at ANZ.

All of which helped give the U.S. dollar index its biggest daily gain since late May.

The greenback was particularly strong against the euro, which had peeled off to $1.1176 from a $1.1410 top at the start of the week. Against the yen, the euro was down at 138.34, having fallen from 140.

The dollar was also firm at 124.86 yen and well above the recent trough of 122.46.

In commodity markets, oil prices rebounding ahead of U.S. inventory data expected to show strong demand for gasoline.

U.S. crude futures added 11 cents to $61.12 a barrel, while Brent rose 10 cents to $64.55.

Gold slipped on the firmer dollar to reach $1,176.90 an ounce.

source: interaksyon.com

Asian shares erase gains, China factory weighs

TOKYO - An index of Asian shares erased its early gains on Tuesday after a measure of Chinese factory activity unexpectedly skidded to an 11-month low.

The flash HSBC/Markit Purchasing Managers' Index (PMI) dipped to 49.2 in March, below the 50-point level. Economists polled by Reuters had forecast a reading of 50.6, slightly weaker than February's final PMI of 50.7.

MSCI's broadest index of Asia-Pacific shares outside Japan was down about 0.1 percent.

The private survey signaled persistent weakness in the world's second-largest economy that is likely to add to calls for more policy easing from Beijing.

"A renewed fall in total new business contributed to a weaker expansion of output, while companies continued to trim their workforce numbers," Annabel Fiddes, an economist at Markit said.

The Shanghai Composite Index, which has recently pushed to seven-year highs, sagged 0.3 percent in early trading. Japan's Nikkei stock average slipped about 0.5 percent, pulling away from the previous session's 15-year highs.

The U.S. dollar edged slightly higher on the day, but still remained well off its recent highs as investors bet that the U.S. Federal Reserve will stay its hand on hiking interest rates in the months ahead.

Underscoring that the long-term view remains intact but the near-term is unclear, Fed Vice Chair Stanley Fischer, the central bank's second-in-command, said on Monday that the Federal Reserve is "widely expected" to begin raising interest rates this year though the policy path remains uncertain.

Fischer said the stronger dollar and weaker oil prices figure in U.S. policymaking, but said the central bank is "trying to look through those phenomena."

The dollar plunged last week after the Fed cut its inflation outlook and its growth forecast. The market consensus is that the Fed will hold off raising rates until at least September, rendering short-term directional bets difficult to make.

The dollar index, which tracks the greenback against a basket of six major rivals, edged up about 0.2 percent to 97.179 .DXY, but remained below its 12-year peak of 100.390 struck on March 13.

The dollar was up 0.1 percent on the day against its Japanese counterpart at 119.80 yen, but remained well below Friday's session high of 121.20 and levels above 122 yen touched earlier this month.

The euro stood at $1.0923, down about 0.2 percent from the previous session but still well above a 12-year nadir of $1.0457 plumbed last week before the Fed's statement.

The euro got a lift against the dollar on Monday after European Central Bank President Mario Draghi said he expected consumer prices to rise gradually by the end of the year even if they might remain very low or negative in the months ahead.

Some market participants took this as a sign that the ECB might wrap up its bond-buying scheme early, though Draghi said it intended to carry out purchases at least until end-September.

The weaker dollar lent support to dollar-denominated commodities, though some investors took profits on recent rallies. U.S. crude futures edged down about 0.4 percent to $47.28 a barrel after soaring 1.9 percent in the previous session.

Spot gold edged down about 0.2 percent after a four-day rally, to $1,187.10 an ounce.

source: interaksyon.com

Asia shares take comfort from U.S. data, yen nurses losses

TOKYO - Asian shares took solace from data showing broad U.S. economic strength even as signs of spreading weakness in China and Europe checked risk appetite, while the yen nursed its losses after sliding to multi-year lows against the dollar and euro overnight.

MSCI's broadest index of Asia-Pacific shares outside Japan was up slightly in early trade. It was on track for a weekly loss of over 1 percent, but was underpinned by record finishes by the Dow Jones industrial average and S&P 500 after a spate of U.S. data added up to a picture of broad economic strength.

Initial U.S. weekly jobless claims fell, factory activity in the U.S. mid-Atlantic region grew at its fastest pace in two decades and existing home sales strengthened, in stark contrast to Thursday's disappointing data releases from Europe and China.

"The raft of data releases from the U.S. continues to paint an upbeat assessment for the U.S. economy at a time when numbers elsewhere have disappointed," strategists at Barclays wrote in a note.

Japan's Nikkei stock average edged down about 0.1 percent in early trade.

The dollar was steady against the yen from late U.S. levels at 118.20 yen, after it scaled a seven-year peak of 118.98 on the EBS trading platform on Thursday.

The euro was also flat on the day at 148.26 after it soared to a six-year high of 149.12 yen in the previous session.

In commodities markets, U.S. crude extended gains from Thursday, adding about 1 percent to $76.61 after closing higher on Thursday. The strong U.S. economic data helped it snap a three-day losing streak, though oil markets remained wary ahead of whether the Organization of the Petroleum Exporting Countries will agree on reducing production when it meets next week.

Spot gold was steady on the day at $1,192.80 an ounce, on track for a weekly gains despite pressure from the stronger greenback.

source: interaksyon.com

Sterling soars on Scottish vote, Asian shares rise

SYDNEY - The British pound rose sharply after the Scottish independence vote indicated Scotland would remain in the United Kingdom, while Wall Street's overnight gains and Alibaba Group's red-hot initial public offering underpinned Asian shares.

Sterling was last up 0.6 percent at $1.6489 after rising as high as $1.6525, a marked turnaround from a 10-month low of $1.6051 touched just last week. Investors awaited final results, with figures so far indicating a solid win for the "No" camp.

"The results appear to be leaning toward 'No,' and this indirectly lifted the dollar against the yen," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

Sterling's rise against the yen took the Japanese currency down more than two full yen to buy 180.66 yen, its lowest since late 2008.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.2 percent, supported by cheer on Wall Street, where both the benchmark S&P 500 and the Dow Jones industrial average set intraday record highs. But the Asian index was still on track for a weekly loss of about 1.4 percent.

Sentiment was also underpinned by news that Alibaba Group Holding priced its IPO at $68 a share, the top end of the expected range, raising $21.8 billion on Thursday in one of the largest-ever stock offerings.

Japan's Nikkei stock average was up 1.6 percent after earlier touching a seven-year high, getting a tailwind from a weaker currency as the dollar pushed to a new six-year high of 109.46 yen. It was last up 0.4 percent at 109.14 yen.

The Nikkei also got a lift after Japanese Prime Minister Shinzo Abe said he aims to carry out as soon as possible reform of the country's $1.2 trillion public fund, the Government Pension Investment Fund (GPIF), in a reshuffle seen as good for equities.

"It's mainly short-term hedge funds chasing the market higher today by buying futures and index-heavy weight stocks," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

The dollar index, which tracks the U.S. unit against a basket of six major peers, stood at 84.272, edging down about 0.1 percent on the day after it climbed as high as 84.743 on Thursday, its strongest level in more than four years.

The euro steadied at $1.2923 after refreshing a 14-month low on Thursday, when it fell as low as $1.2834.

Risk sentiment was tempered by geopolitical clouds on the horizon. The U.S. Senate on Thursday approved a bill requested by President Barack Obama to arm and train moderate Syrian rebels fighting Islamic State militants, which now goes to Obama to sign into law.

Obama said the strong bipartisan support showed Americans were united in the fight against Islamic State militants.

"The emergence of the militant group ISIS in Syria and Iraq, and recent increase in efforts to fight it, has ushered in a new era of geopolitical risk" in the Middle East and North Africa, strategists at Barclays wrote in a client note.

"We think the stage seems set for a prolonged period of heightened regional uncertainty, with risks potentially spilling over into global oil markets and other economies and financial markets in the region," they said.

Brent crude held below $98 a barrel on Friday, but was set for its first weekly gain in three on the possibility of lower OPEC output. Brent edged down to $97.65 a barrel, while U.S. crude slipped slightly to $92.97.

Spot gold inched lower to $1,224.35 an ounce after touching $1,216.01 in the previous session, its lowest since Jan. 2 on speculation about an earlier-than-expected U.S. interest rate hike.

source: interaksyon.com

Asian shares track Wall Street lower, yen gains

SYDNEY - Asian share markets slipped on Friday as troubles at a small Portuguese bank managed to wrongfoot investors already made anxious by the US earnings season and a spate of disappointing economic data globally.

Tensions in the Middle East also continued to simmer with Israeli officials seeming to hint at a possible assault on Gaza by ground forces.

As a result, yields on safe-haven US and German debt fell, the yen scaled a five-month peak against the euro and gold hit a three-and-a-half month high.

Japan's Nikkei fell 0.7 percent, while Australia eased 0.4 percent. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent.

Analysts emphasised that the woes of one Portuguese bank were no threat to the sovereign's rating and rather the news served as an excuse to book profits on what has been a long rally in European stocks and bonds.

Indeed, there were signs investors were taking money out of peripheral euro zone debt and seeking higher returns in the emerging world. It was notable that MSCI's index of emerging market stocks actually rose on Thursday having hit a 17-month peak earlier in the week.

In contrast, European stocks were buffeted as trading in Banco Espirito Santo was halted after a 19 percent drop. The bank's largest shareholder suspended trading in its own shares and bonds due to "material difficulties" at its own largest shareholder.

The damage was all the greater as data showed unsettlingly weak readings for May industrial production in France and Italy. These followed equally disappointing numbers from Germany and the UK, which has led many analysts to cut their estimates of economic growth for the second quarter.

Portugal's market fell 4.2 percent and Italy's FTSE MIB 1.9 percent, pulling down the European index by 0.78 percent.

While the fate of a relatively minor bank in Europe would not normally have had much affect on Wall Street, it was enough to make investors reconsider the market's high valuations as the earnings season gets into full swing.

The S&P 500 index fell 0.41 percent, while the Dow eased 0.42 percent and the Nasdaq 0.52 percent.

The S&P 500 financial sector index fell 0.5 percent and Wells Fargo & Co, which reports earnings later Friday, lost 0.7 percent.

With stocks off the boil, Treasuries picked up the usual safe-haven bid for shorter-term debt which is prized for its deep liquidity. Yields on two-year notes fell over 4 basis points to 0.4561 percent, a marked reversal from a high of 0.5360 percent hit just on Wednesday.

German debt played much the same role in Europe, where yields on 10-year bund yields ended at a 14-month trough of 1.20 percent. Bonds in the euro zone periphery were not so lucky, with yields on Portuguese, Spanish and Italian paper all rising sharply.

The itch for safety benefited the Japanese yen which climbed a full yen to 137.76 per euro. The dollar dipped to 101.26 yen even as it gained on the euro to $1.3599.

Yet the higher-yielding Australian and New Zealand dollars remained well supported, again suggesting there was no widespread retreat from risky assets.

In commodities, gold was up at $1,336.01 having touched a 3-1/2 month top of $1,345.00.

Oil prices fell anew after a brief rally on Thursday. Brent was off 13 cents at $108.54 a barrel, while U.S. crude eased 16 cents to $102.77.

source: interaksyon.com

Asian shares hit four-month high on China data, Yellen

TOKYO - Asian shares hit four-month high on Tuesday after China's official PMI survey showed manufacturing managed to continue expanding in March, and dovish comments from Federal Reserve Chair Janet Yellen.

MSCI's broadest index of Asia-Pacific shares outside Japan rose by up to 0.3 percent to reach its highest level since early December.

China's official Purchasing Managers' Index increased to 50.3 in March from February's 50.2, in line with economists' forecasts. Above 50 indicates expansion, below 50 signifies contraction.

While the PMI figure alone is unlikely to dispel concerns of a slowdown in China, investor sentiment has improved on China in recent weeks as they expect Beijing will adopt a stimulus plan to achieve its growth target.

Shares were also supported after Fed chair Yellen reinforced the need for "extraordinary" commitment to support the U.S. economy, seemingly tempering expectations of a sooner-than-expected start to the rate-hike cycle.

Yellen gave a strong defense of the Fed's easy-money policies in her first public speech since becoming Fed chair two months ago, saying there remains "considerable" slack in the economy and job market.

"It seems like she expressed her own dovish ideas. There's nothing really new and the outlook of the Fed's policy has not changed that much but the markets like her remarks," Makoto Noji, senior strategist at SMBC Nikko Securities.

Emerging markets, which suffered a sharp selloff earlier this year on concerns about a turn in Fed policy, slowdown in China and political instability in some countries, appeared to have regained some stability.

MSCI emerging market index hit a three-month high on Monday, having outperformed S&P 500 since late March. Among them, Brazilian shares hit four-month high.

Rising risk appetite undermined low-return assets that had attracted safety bids last month at the height of the Ukrainian crisis.

Gold hit a seven-week low of $1,282.04 per ounce on Monday, despite Yellen's dovish comments while the yen also slipped to a three-week low against the dollar of 103.44 yen and a nine-month low against the risk-sensitive Australian dollar at 95.75.

The euro bounced back against the U.S. dollar to fetch $1.3773 even as softer-than-forecast inflation numbers put more pressure on the European Central Bank to act against the threat of deflation.

Euro zone inflation dropped to 0.5 percent in March, its lowest level since November 2009, having been in the ECB's "danger zone" of below 1 percent for six consecutive months.

However, not many market players expect the ECB to act at its policy meeting on Thursday, partly because of comments from ECB council member and Bundesbank President Jens Weidmann on Saturday.

Weidmann said that the euro zone is not in a deflationary cycle and that the ECB should not over-react to a slowdown in inflation caused largely by cyclical factors which should prove temporary.

Crude futures were off three-week highs following news Russia was withdrawing some troops on the Ukrainian border. U.S. crude futures stood at $101.41, off Friday's high of $102.24.

source: interaksyon.com

Asian shares on defensive, hoping for China stimulus plan

TOKYO - Asian shares were in a defensive mode on Tuesday after Wall Street fell overnight, though still-vague hopes of a new stimulus plan in China could improve investor sentiment.

U.S. Treasuries prices fell, with the benchmark two-year yield hitting a six-month high as investors grew nervous that the Federal Reserve may raise interest rates sooner than expected. Bond yields rise when prices fall.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.1 percent as Australian shares fell 0.5 percent, while Japan's Nikkei dropped 0.5 percent.

On Wall Street, the Nasdaq Composite Index led the losses with a fall of 1.2 percent to five-week low, as investors took some money off recent top performers such as biotech shares. The S&P500 Index fell 0.5 percent to 1,857.44.

Concerns over Ukraine and soft U.S. manufacturing were cited as possible catalyst, though market players noted the selling could also reflect unwinding of positions ahead of the quarter-end.

The survey on U.S. manufacturing by financial data firm Markit also showed U.S. manufacturing activity slowed in March.

U.S. President Barack Obama and major industrialized allies warned Russia on Monday it faces additional economic sanctions if President Vladimir Putin takes further action to destabilize Ukraine following the seizure of Crimea.

"In short, there's nowhere to put money at this point. Investors are generally upbeat on the U.S. but they want to see more evidence that the weakness in some of the recent data is due to a bad weather," said Tohru Yamamoto, chief fixed income strategist at Daiwa Securities.

Yet short-term U.S. bond prices are under pressure after Federal Reserve Chair Janet Yellen said the Fed could raise rates six months after its current bond-buying program ends - potentially as soon as spring 2015.

Even as the U.S. 30-year yield fell to 3.56 percent, near this year's low of 3.525 percent, short-dated debt yields moved in the opposite direction, flattening the yield curve sharply.

The U.S. two-year yield shot to six-month high of 0.4655 percent also due in part to caution over the two-year debt sale on Tuesday, the first leg of U.S. government issuance this week totaling $96 billion.

Rising U.S. short-term rates were undermining the attraction of precious metals, with gold was fetching $1,308.91 per ounce, close to Monday's near one-month low of $1,307.54.

Silver tumbled to a six-week low of $19.84 and last stood at $19.89.

In contrast, emerging markets were generally resilient after weak Chinese manufacturing data on Monday sparked expectations the Chinese government could unveil stimulus measures following Monday's weak survey of manufacturing.

source: interaksyon.com

Asian shares tick up cautiously as China data looms

TOKYO - Asian shares cautiously rebounded from two-week lows on Thursday though investors were in no mood to embrace risk ahead of a batch of Chinese data that may offer clues about the extent of its economic slowdown.

A standoff in Ukraine, signs of weakness and other risks in China's economy and a massive fall in copper prices are spooking investors, though a flat close on Wall Street and some positive regional data helped to underpin some markets.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9 percent, recouping a large chunk of its losses the previous day, with Australian shares gaining on strong local employment data.

Japan's Nikkei rose 0.5 percent as Japanese machinery orders beat expectations, though the gain came only after a 2.6 percent drop the previous day, when both European shares and emerging market shares fell to one-month lows.

"What we're seeing today is a reaction to yesterday's sharp decline based on price (valuation) merits," said Hana Daetoo analyst Chang Hee-jong.

"But concerns about China remain the biggest issue for the market, and this will continue to affect markets throughout the first half of this year."

Copper - seen as a good gauge of global economic strength because of its extensive use - stabilized at $6,508 a tonne, keeping some distance from a four-year low at $6376.25 hit on Wednesday.

Still, after a drop of around 7 percent so far this month, investors are worried about a possible unraveling of Chinese loan deals using copper as collateral, which could add more pressure on copper prices.

On Wall Street, the S&P 500 reversed early losses and ended nearly flat, outperforming many others thanks in part to a string of positive data on the U.S. economy.

Investors will keep a close watch on Chinese data due at 0530 GMT, including urban investment, industrial output and retail sales, which will follow a disappointing series of February data in recent days.

"We expect modest downside surprises, which are likely to keep sentiment toward China somewhat negative," analysts at Barclays Capital said in a note.

The diplomatic stalemate between Russia and the West over Ukraine has also led investors to buy traditional safe haven assets.

Gold hit a six-month high of $1374.45.

U.S. Treasuries have erased all their losses after last week's strong payrolls data, with the benchmark 10-year yield at 2.74 percent versus its six-week high of 2.82 percent hit on Friday.

In the currency market, the Swiss franc was little changed after hitting a two-and-a-half year high of 0.8734 franc to the dollar, while the Japanese yen, which is under pressure from the Bank of Japan's easing, also ticked up slightly.

Going against the tide of risk-off trading, the New Zealand dollar hit a five-month high of $0.8527 after the country's central bank raised rates as expected and pointed to further tightening ahead to curb inflationary pressures.

The Australian dollar jumped 0.8 percent to $0.9062 after surprisingly strong local employment data.

U.S. crude futures traded near one-month lows hit on Wednesday after Washington announced a surprise plan for a test release of strategic oil reserves, trading at $98.12 per barrel, near Wednesday's low of $97.55.

But the European benchmark Brent held relatively firm at $108.26 as it drew support from the unfolding crisis over Ukraine.

source: interaksyon.com

Asian shares skid, but dollar regains some traction

MANILA - Asian shares stumbled on Tuesday though the dollar regained firmer footing, after disappointing data cast doubt on the strength of the U.S. economy and gave investors little reason to hope for stability in emerging markets after their recent rout.

MSCI's broadest index of Asia-Pacific shares outside Japan fell about 1.4 percent, touching its lowest level since early September at one point and flirting with its biggest one-day decline since August. But the greenback's descent took a breather, with the dollar index gaining 0.2 percent to 81.164.

Hong Kong shares, reopening on Tuesday after the Lunar New Year holiday, caught up with plunges elsewhere. Mainland Chinese markets remained shut for the holiday and will reopen on Friday.

"Experienced emerging market investors would be looking at this selldown with great interest, looking to pick up quality names on the dip, but they are still in the minority for now," said Erwin Sanft, Standard Chartered's Hong Kong-based China equity strategist.

Japan's Nikkei stock average lost 3.3 percent, extending its declines into a fourth session, breaking below the key technical 200-day moving average for the first time since November 2012 and bringing losses for this year to around 13 percent.

That makes it the worst performer among major developed markets since the start of 2014, with the S&P 500 down 5.8 percent and the pan-European FTSEurofirst 300 down 3.3 percent. The sharp drop came even after the Bank of Japan bought 123 billion yen ($1.21 billion) worth of exchange traded funds this year as of February 3 to support the equities market.

Data showing U.S. manufacturing activity slowed sharply last month dealt a heavy blow to markets already worried that the U.S. Federal Reserve's decision to taper its asset purchases would lead to capital flight from emerging markets.

"Investors should steer clear of risk assets over the short term as the turmoil does not look like it will be over anytime soon," Mitul Kotecha, the Hong Kong-based head of global foreign exchange strategy for Credit Agricole, said in a note to clients.

"A combination of tapering, a confluence of country- specific emerging market concerns and weaker growth in China provide the backdrop for a volatile few weeks, if not longer, ahead," Kotecha added.

The yield on benchmark 10-year U.S. Treasury notes stood at 2.589 in Asian trading, after falling as low as 2.582 percent on Monday, the lowest since November 1.

January's sharp fall in U.S. output activity came on the back of the biggest drop in new orders in 33 years, while construction spending barely rose in December, suggesting the U.S. economic recovery is more tenuous than some investors had believed.

The data pushed the benchmark S&P 500 index into its worst single-day drop in seven months, while the CBOE volatility index soared 16.5 percent to close at its highest level since December 2012.

That helped send the dollar as low as 100.77 yen and the euro as low as 136.37 yen, levels neither pair had touched since late November.

In Asian trading, the dollar took back some lost ground, adding about 0.3 percent to buy 101.24 yen, while the euro rose 0.1 percent on the day to 136.75 yen.

The Australian dollar rallied after the Reserve Bank of Australia dropped its easing bias in the first policy review of the year, encouraging markets to increase the chance of an interest rate hike.

The Aussie was last up 1.5 percent at $0.8877 after the RBA also toned down its rhetorical campaign for a weaker currency.

On the commodities front, U.S. oil edged up slightly to $96.62 a barrel, after plunging $1.09 on Monday, as the weaker-than-expected U.S. factory data fanned fears about demand in the world's largest economy.

March Brent crude firmed slightly to $106.04 a barrel after two straight sessions of losses.

The stock market selloff added to the safe-haven appeal of gold, with spot gold steady on the day at $1,259.15 an ounce, after gaining 1.1 percent on Monday.

But three-month copper on the London Metal Exchange edged down to $7,034.75 a tonne after earlier hitting a two-month low and on track for its tenth straight losing session.

source: interaksyon.com

Asian shares sag, dollar rises on upbeat U.S. data

TOKYO - Asian shares sagged on Friday though upbeat signals on China's manufacturing activity limited losses, while the dollar pushed higher after upbeat U.S. data led some investors to price-in a less dovish stance at the U.S. Federal Reserve.

China's manufacturing sector grew at the fastest in 18 months in October, with the official Purchasing Managers' Index (PMI) rising to 51.4 last month from September's 51.1, beating economists' consensus forecast of 51.2.

The final HSBC/Markit Purchasing Managers' Index (PMI) came in at 50.9, up from 50.2 in September and unchanged from a preliminary flash estimate released last week.

MSCI's broadest index of Asia-Pacific shares outside Japan fell about 0.2 percent, while Australian shares .AXJO gave up 0.2 percent, but still remained just shy of five-year highs. Japan's Nikkei stock average erased early gains and dropped 0.6 percent.

U.S. S&P E-mini futures edged up 0.1 percent, after the S&P 500 Index closed down about 0.4 percent but still gained 4.5 percent for the month.

Later on Friday, the U.S. ISM survey of manufacturing for October could offer investors a fresh signal on the Fed's future course.

"If the ISM report is better than expected, it could add to revived tapering expectations, and U.S. yields and the dollar could go up and stocks could go down," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

Data on Thursday showed the pace of business activity in the U.S. Midwest jumped more than expected in October, soothing some worries about sluggish fourth-quarter growth after last month's federal government shutdown.

A decline in new jobless claims in the latest week also added to evidence that the economy weathered the shutdown. New claims fell by 10,000 to 340,000, just above the average estimate of 339,000.

Still, not all investors or economists were convinced that the latest U.S. data heralded a shift in monetary policy expectations.

"The existence of noise in the October data will likely make it difficult for the Fed to gather enough evidence to start tapering in December," strategists at Barclays wrote in a note to clients, adding that they still to expect the central bank to begin reducing its current $85 billion monthly bond purchases in March 2014.

Pressure on euro

The euro remained under pressure after plunging in the previous session as euro-zone inflation dropped to its lowest rate in nearly four years, heightening expectations that the European Central Bank will further ease its monetary policy.

The euro dropped about 0.3 percent to $1.3545, moving away from a two-year peak of $1.3833 set one week ago. On Thursday, it suffered its biggest one-day fall against the greenback in six months, tumbling 1.1 percent.

Data on Thursday showed euro-area inflation slowed to a four-year low of 0.7 percent last month, far below the ECB's target of just under 2 percent. Other data showed unemployment held at record highs in September.

The dollar index, which measures the greenback against six major currencies, was on track for a sixth session of gains, rising 0.3 percent to 80.398 after touching a two-week peak of 80.418 and pulling further away from a nine-month trough of 78.998 hit one week ago.

Against the Japanese currency, the dollar was about 0.2 percent lower on the day at 98.18 yen.

In commodities trading, gold steadied but was still trading close its lowest in nearly two weeks, hurt by sharp losses in the previous session from month-end profit-taking, the strong U.S. economic data and the higher dollar. Spot gold edged up 0.1 percent to $1,326.53 an ounce, after sliding 1.4 percent on Thursday.

source: interaksyon.com

Asian shares cheer as deal to avert U.S. default reached

SYDNEY - Share markets from Australia to Japan staged a relief rally on Thursday after legislators produced a last-minute deal to lift the U.S. government's borrowing limit and dodge a potentially catastrophic debt default.

The agreement, crafted by U.S. Senate leaders, has been approved by Congress, leaving President Barack Obama to sign the bill into law. Obama has vowed to do so promptly and begin reopening the government "immediately.

It came just hours ahead of an October 17 deadline when the Treasury Department said it would have exhausted its borrowing authority.

MSCI's broadest index of Asia-Pacific shares outside Japan hit a fresh five-month high and was last up 0.4 percent. Tokyo's Nikkei advanced 1.2 percent to its highest in three weeks.

But in what appeared to be a buy-on-the-rumor/sell-on-the-fact move, U.S. stock index futures actually dipped on the news, having already rallied 1.3 percent overnight on hopes that a breakthrough was imminent.

The dollar index, which tracks the greenback's performance against a currency basket, also slipped a touch to 80.381, pulling back from a one-month high of 80.745.

The deal, however, does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats. It funds the government until January 15 and raises the debt limit through to February 7, so global markets face the possibility of another showdown in Washington early next year.

"The can has been kicked further down the road...the reset button has been pushed and we will go thought this all again in two months time," said Evan Lucas, market strategist at IG in Melbourne.

But Lucas expected "normal trading" to return over the coming days as the earnings season gets underway.

Still, the resolution couldn't have come at a better time for companies such as South Korean train maker Hyundai Rotem, which recently launched an initial public offering in what could be the country's biggest share sale so far this year.

Crisis over?

In the currency market, the improved risk appetite saw investors favor high-yielding currencies including the Australian dollar.

The Aussie dollar hit a 4-month high of $0.9574 and scaled a 4-1/2 month peak of 94.48 yen. It has since stepped back a notch to $0.9534 and 94.01 yen.

Against the yen, the U.S. dollar briefly reached a three-week high of 99.01, before strong selling interest knocked it back to 98.64. The euro edged up 0.1 percent to $1.3549.

Among commodities, copper slipped 0.5 percent to $7,227 a tonne (1 tonne = 1.12 metric tons), while gold traded at $1,280 an ounce -- struggling to gain momentum in the absence of safety bids. U.S. crude dithered at $102 a barrel.

Many traders are already trying to get past the fiscal drama and looking to see when a backlog of U.S. economic data, including the September payrolls, will be released when the partial government shutdown is lifted.

With the maneuvering in Washington just about over, investors will re-focus on economic news and the timeline for the U.S. Federal Reserve's tapering of its bond-buying program -- a major driver of global assets in recent months.

The Fed stunned markets last month by opting to delay the start of stimulus reduction.

"It will be some time before we are able to get a clear read on the U.S. labor market post-shutdown," said Westpac economist Elliot Clarke.

"But a logical expectation given recent events and the lack of a long-term solution is that we will see soft employment growth through the remainder of 2013 and into 2014."

That, Clarke said, is likely to see the Fed maintain a dovish tilt, adding the U.S. central bank will very likely have to downgrade its 2013 and 2014 growth forecasts given the impact of the U.S. government shutdown.

source: interaksyon.com

Asian shares firm, but U.S. budget impasse constrains

TOKYO - Asian shares ticked up on Friday after U.S. jobless claims data pointed to an improving labor market, but the lack of progress in budget and debt negotiations in Washington kept investors on edge.



The solid jobs data revived expectations of a reduction in U.S. monetary stimulus, but not without reservation, after the Federal Reserve's surprise decision not to do so last week and conflicting messages from various top Fed officials since then.



MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.1 percent, with Australian shares scaling a five-year high, in sympathy with Wall Street shares, which broke a five-day losing streak on Thursday.



"Though U.S. jobless claims data is positive enough to marginally lift the market, investors need further evidence of a U.S. economic recovery as well as a settlement in Washington," said Hanyang Securities analyst Lim Dong-rak.



U.S. weekly initial claims for unemployment benefits dropped 5,000 last week despite economists' expectations of a rise, helping U.S. shares to end a five-day losing streak.



The claims data's four-week moving average, a key gauge that smoothes out weekly volatility, dropped to 308,000, the lowest level since June 2007.



That fall could add to the case that the Fed is safe to go ahead with winding down its bond buying program later this year. Yet, investors are now cautious not to jump to a conclusion.



"The communication between markets and the Fed has broken down since last week. And different Fed officials are saying different things these days, and nobody knows exactly why the Fed did not taper this month after all," said Tohru Yamamoto, chief fixed income strategist at Daiwa Securities.



Indeed, four top Fed officials acknowledged on Thursday the Fed confused markets but they hardly agree on what to do next, with both hawks and doves making their own cases, doing little to ease investors' confusion.



Budget showdown



Traders also see an impasse in U.S. congressional negotiations over the budget and increasing the federal borrowing limit as likely to cap gains in global shares in the next few weeks.



Republican lawmakers in the House of Representatives refused to give in to President Barack Obama's demands for straight-forward bills to keep the government running beyond September 30, raising the chance of a government shutdown.



While investors see limited economic impact from a short period of shutdown, that does not bode well for negotiations on the more important issue of raising the debt ceiling.



Failure to act on the ceiling by October 17, when the Treasury will have run out of money, could lead to an unprecedented U.S. sovereign debt default.



The cost of protection against U.S. sovereign default in the credit default swap market has risen to its highest level in four months.



In the currency market, the dollar held onto modest overnight gains following the jobless claims data, but was on track to end the week flat, hampered by the risk of U.S. default.



The dollar was also helped by the euro's fall amid renewed concerns Italy's fractious coalition government could fall apart.



Italian center-right deputies supporting former Prime Minister Silvio Berlusconi renewed threats to resign if their leader is expelled from Parliament following a tax fraud conviction.



The euro traded at $1.3480, off a seven-month high of $1.3569 hit last week while the dollar fetched 98.80 yen, maintaining most of its 0.6 percent gain on Thursday.



The yen had no reaction to data that showed Japan's core inflation rose to a five-year high.



Oil prices were soft as fears of an escalation in a military conflict in the Middle East eased as the United States and Russia agreed on a draft resolution that would demand Syria give up its chemical arms and Washington and Tehran held the highest-level dialogue since the Islamic revolution in Iran three decades ago.



U.S. crude futures dropped 0.3 percent to $102.71.

source: interaksyon.com

Asian shares jump, yields and dollar fall as Fed stuns

SYDNEY - Asian shares and currencies rallied broadly on Thursday after the Federal Reserve stunned markets and decided not to taper its asset-buying program, sending U.S. bond yields and the dollar into a tailspin.

With U.S. stocks at a fresh record high, MSCI's broadest index of Asia-Pacific shares outside Japan jumped 0.9 percent to its highest in almost four months.

Australia's main index gained 1.1 percent to a five-year high and Japan's Nikkei managed to brush aside a rise in the yen to climb 0.8 percent to a two-month peak.

The prospect that U.S. rates could stay low for longer was further underlined by news from the White House that noted-dove Janet Yellen was the front-runner to take over the Fed when Ben Bernanke steps down.

"The Fed today chose an extremely dovish course of action," said Michelle Girard, a senior U.S. economist at RBS. "It did not just postpone tapering for three months - today's developments open the door for a longer-lasting QE3 program."

"This, in turn, may open the door for a later start date for rate hikes."

All of which was a major relief to emerging markets, which have been suffering as higher yields in the rich world attracted away much-needed foreign capital.

"The surprise from the Fed means that bond yields are going to be lower than we previously expected by the end of the year," said Tony Morriss, head of interest rate research at ANZ.

"This is good news for a renewed search for yield, credit spread performance and easing of some selectively intense pressure in EM markets."

We protest

The Fed's decision to keep its asset buying at $85 billion a month was seen as a rebuff to the sharp rise in Treasury yields over recent months, which was proving a headwind for the housing market and the economy in general.

"This is a major Fed protest against the tightening of financial conditions," said Alan Ruskin, global head of foreign exchange strategy at Deutsche Bank in New York.

"The Fed is very worried that recent tightening of financial conditions is sizable and, probably more important, the back-up in yields is too swift to be able to comfortably conclude that the economy will not slow too much."

The bond market got the message and 10-year Treasury yields tumbled 16 basis points to 2.69 percent. That was an effective easing in world financial conditions since Treasuries set the benchmark for borrowing costs almost everywhere.

Yields on Japanese debt, for instance, promptly dropped to four-month lows.

Futures contracts for the Fed funds rate and Eurodollars romped higher right out to 2016 as the market also pushed back the likely timing of the first hike in U.S. rates.

That in turn sent the dollar tumbling across the board. The euro was up at $1.3522, having already gained 1.2 percent on Wednesday to its highest in almost eight months.

The dollar was down at 98.10 yen, after shedding a full yen overnight. Against a basket of currencies, the dollar dived 1.1 percent to its lowest since February.

Equity investors cheered as the Dow Jones industrial average gained 0.74 percent, while the S&P 500 added 0.92 percent to a fresh record.

All of which should boost hard-hit emerging market (EM) currencies such as the Indonesian rupiah and Indian rupee. The Thai baht, Malaysian ringgit and Singapore dollar were all trading markedly higher.

However, that also created a headache for central banks in Australia and New Zealand which would much prefer their currencies to be weaker.

The Australian dollar surged 1.5 percent to $0.9490, an effective tightening in conditions that will pressure the Reserve Bank of Australia to cut rates to compensate.

In contrast the extension of U.S. stimulus was seen as positive for global commodity demand, and prices.

Spot gold stormed ahead to $1,363.16, a gain of over $60 from early Wednesday, while copper futures jumped 1.6 percent to $7,297.25.

Brent crude added another 13 cents to $110.74 a barrel, up from a low of $107.64 on Wednesday. U.S. crude reached $108.49 compared with $105.32 early on Wednesday.

source: interaksyon.com

Asian shares fall, eyes on German ruling, Fed meeting

TOKYO - Asian shares fell on Tuesday as investors repositioned before a German Constitutional Court ruling on the euro zone's bailout funds which could remove one risk for Europe, and a U.S. Federal Reserve meeting that may yield widely expected stimulus measures.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 percent, dragged lower by Chinese markets, with Shanghai shares slumping 1 percent while investors took profits from recent rallies to push Hong Kong equities down 0.6 percent.

Japan's Nikkei average slipped 0.8 percent, weighed by declines in cyclical stocks which are generally linked to the health of the economy.

"Investors are cautious ahead of major events later this week," said Lee Young-won, an analyst at HMC Investment & Securities, referring to Germany's constitutional court verdict on Wednesday which would pave the way for activating the European Central Bank's scheme and the Fed's two-day policy meeting ending on Thursday.

Global shares had slipped and the euro fell at the end of last week as investors took profits from last week's rally after the European Central Bank outlined its bond-buying scheme designed to cap the rise in the borrowing cost of highly indebted euro zone states.

Spain, which has already received aid of up to 100 billion euros ($127.86 billion) from the euro zone to help it shore up its ailing banks, has said it could seek a sovereign rescue once euro zone partners and the ECB provide details on conditions attached and will likely hold discussions at the September 14-15 meetings of euro zone and EU finance ministers.

Europe continues to muddle through its crisis management, with Greece admitting it was having trouble convincing its foreign lenders to accept an austerity plan which is essential to revive the aid payments Athens needs to avoid bankruptcy.

Following Friday's disappointing U.S. jobs data, markets now believe the Fed will opt for some form of further monetary easing this week to help underpin the fragile U.S. recovery.

But views remain mixed over the specifics. Some see a powerful move such as a third round of bond buying known as quantitative easing, while others expect alternative options such as extending its commitment to keep interest rates near zero beyond the current period through late 2014 into 2015.

Reflecting growing investor jitters, the CBOE Volatility index .VIX, which measures expected volatility in the Standard & Poor's 500 index over the next 30 days, closed up 13.21 percent on Monday for its largest daily increase in seven weeks.

The euro rose 0.3 percent to $1.2790, nearing Friday's four-month peak of $1.2815.

"As long as there are expectations of quantitative easing by the Fed, the euro is likely to have some support," said a senior trader at a European brokerage.

While equities underwent an adjustment, policy hopes supported Asian credit markets, tightening the spread on the iTraxx Asia ex-Japan investment-grade index by 2 basis points.

Tight grains threatening

With the euro zone debt crisis severely undermining economic activities in Europe and dealing a blow to the world's growth engine China, which counts Europe as its key export market, the ripple effect is spreading to the rest of Asia.

South Korea announced an incremental stimulus package on Monday to nurse its export-driven economy through prolonged hard times, a move many Asian governments are expected to follow as Europe slides towards recession and the United States struggles to grow.

There were some bright spots amid general wariness. Big Japanese manufacturers' turned optimistic for the first time in four quarters in July-September. And Australian business conditions improved in August as most firms enjoyed a rebound in sales and profits.

But soaring prices of grains pose a big threat to the vulnerable global economy.

Australia, the world's No.2 wheat exporter, cut its forecast for wheat production in the 2012/13 crop marketing year and warned that yields could fall further.

Global grains prices have been bolstered by tight supplies as the worst drought in at least half a century hit U.S. farmland while Russia, the No. 4 wheat supplier, could limit exports.

"The tight supply is driving grains prices higher and they will remain elevated until demand subsides, when the number of cattle dwindles on scarce feed," said Masayo Kondo, president of research firm Commodity Intelligence in Tokyo.

"It will take about a half year for this cycle to complete and grains prices to start falling. Until then, inflationary pressures will mount and undermine global economies," he said.

Global monetary easing in itself does not necessarily put additional upward pressure on grains prices, but it will boost prices of precious metals, nonferrous metals and oil where speculative money typically flows, Kondo said.

U.S. crude eased 0.2 percent to $96.34 a barrel while Brent inched down 0.1 percent to $114.69 a barrel.

Spot gold added 0.3 percent at $1,730.54 an ounce, below a six-month high of $1,741.30 touched on Friday.

source: interaksyon.com