Asian shares near all-time peak, oil heads to $60 on economic revival hopes

SYDNEY - Asian shares hovered near record highs on Monday while oil edged closer to $60 a barrel on hopes a $1.9 trillion COVID-19 aid package will be passed by US lawmakers as soon as this month just as coronavirus vaccines are being rolled out globally.

MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.2 percent at 717.2, not far from last week’s record high of 730.6.

Japan’s Nikkei climbed 0.3 percent while Australian shares advanced 0.5 percent led by technology and mining shares.

E-mini futures for the S&P 500 rose 0.3 percent in early Asian trading.

Hopes of a quicker economic revival and supply curbs by producer group OPEC and its allies pushed oil to its highest level in a year as it edged near $60 a barrel.

Global equity markets have scaled record highs in recent days on hopes of faster economic revival led by successful vaccine rollouts and expectations of a large US pandemic relief package.

On Friday, the Nasdaq and S&P 500 hit all-time highs on stronger-than-expected corporate results in the fourth quarter and as companies were on track to post earnings growth for the first quarter instead of a decline.

The rallies came even as US data painted a dour picture of the country’s labor market with payrolls rising by 49,000, half of what economists were expecting.

The weak report spurred the push for more stimulus, underscoring the need for lawmakers to act on President Joe Biden’s $1.9 trillion COVID-19 relief package.

Biden and his Democratic allies in Congress forged ahead with their stimulus plan on Friday as lawmakers approved a budget outline that will allow them to muscle through in the coming weeks without Republican support.

US Treasury Secretary Janet Yellen predicted the United States would hit full employment next year if Congress can pass its support package.

“That’s a big call given full employment is 4.1 percent, but one that will sit well with the market at a time when the vaccination program is being rolled out efficiently in a number of countries,” said Chris Weston, Melbourne-based chief strategist at Pepperstone.

In currencies, the US dollar came off a four-month high against the Japanese yen to be last at 105.39 following the weak jobs report.

The euro edged up slightly after rising 0.7 percent on Friday to a one-week high of $1.2054. It was last at $1.2044.

The risk-sensitive Australian dollar held near a one-week high at $0.7678.

In commodities, Brent crude and US crude climbed 52 cents each to $59.86 and $0.57.37 respectively.

US gold futures were up 0.2 percent at $1,817 an ounce.

-reuters

Continued oil market turmoil weighs on global stocks

Oil-price turmoil gripped markets once more Tuesday, a day after US crude futures crashed below zero for the first time as the coronavirus crisis crippled global energy demand and worsened a supply glut.

The commodity rout also sent world equity markets spiraling lower, as investors fretted it could compound an expected deep global economic downturn.

The benchmark WTI price collapsed Monday to an unprecedented low of minus $40.32. Negative prices mean traders must pay to find buyers to take physical possession of the oil -- a job made difficult with the world's storage capacity at bursting point.

A day after its historic slide into negative territory amid a supply glut, US oil futures finished in positive territory.

But the market remained under heavy pressure due to the oversupply as coronavirus shutdowns constrain global growth.

Storage is a particularly big problem in the US where WTI oil is delivered at a single, inland point.

In Europe, where Brent is the benchmark, there are several delivery sites and their proximity to the sea allows some of it to be stored on tankers.

"Players are now paying buyers to take oil volumes away as the physical storage limit will be reached. And they are paying top dollar," said Rystad Energy analyst Louise Dickson.

This week's massive sell-off came just ahead of Tuesday's expiration of the May contract. Most trading has now moved to the June contract, and May WTI was back in positive territory by the close of New York trading.

- 'Slice of pizza' -

Oil markets have been ravaged this year after the pandemic was compounded by a price war between Saudi Arabia and Russia.

"Ever thought that it could be imaginable to see the price of US oil valued at less than a pizza? Or even a slice of pizza? How about for it to actually cost (money) to sell US crude?" said Jameel Ahmad, head of currency strategy and market research at FXTM.

While the two big oil-producing nations have drawn a line under the dispute and agreed with other countries to slash output by almost 10 million barrels a day, that is not enough to offset the lack of demand and prices have remained low.

European benchmark Brent North Sea oil for June delivery tumbled to an 18-year low, before coming off worse levels in volatile deals.

- Stock markets sink -

Equity markets were meanwhile also deep in the red on Tuesday, having enjoyed a healthy couple of weeks thanks to massive stimulus measures and signs of an easing in the rate of new infections globally.

Key eurozone stocks markets closed with declines of up to four percent, while London did a little better thanks to a weaker pound.

On Wall Street, the Dow finished down more than 630 points, or 2.7 percent.

"Continued dysfunction in the crude oil markets" was the main factor behind the decline, analysts at Charles Schwab said, "while the Street continues to assess the timing of when the US economy may be able to reopen."

Analysts warned the drop in stock markets could be an indication that the recent surge may have been hasty, and that another prolonged sell-off is possible.

- Key figures around 2030 GMT -

West Texas Intermediate (May delivery): UP at $10.01 per barrel

West Texas Intermediate (June delivery): DOWN 43 percent at $11.57 per barrel

Brent North Sea crude (May delivery): DOWN 22.1 percent at $19.93

Brent North Sea crude (June delivery): DOWN 24.4 percent at $19.33

New York - Dow: DOWN 2.7 percent at 23,018.88 (close)

New York - S&P 500: DOWN 3.1 percent at 2,736.56 (close)

New York - Nasdaq: DOWN 3.5 percent at 8,263.23 (close)

London - FTSE 100: DOWN 3.0 percent at 5,641,03 points (close)

Frankfurt - DAX 30: DOWN 4.0 percent at 10,249.85 (close)

Paris - CAC 40: DOWN 3.8 percent at 4,357.46 (close)

EURO STOXX 50: DOWN 4.1 percent at 2,791.34 (close)

Tokyo - Nikkei 225: DOWN 2.0 percent at 19,280.78 (close)

Hong Kong - Hang Seng: DOWN 2.2 percent at 23,793.55 (close)

Shanghai - Composite: DOWN 0.9 percent at 2,827.01 (close)

Euro/dollar: DOWN at $1.0859 from $1.0862 at 2100 GMT

Dollar/yen: UP at 107.77 yen from 107.62

Pound/dollar: DOWN at $1.2301 from $1.2442

Euro/pound: UP at 88.27 pence from 87.30

burs-jmb/cs

Agence France-Presse

Stocks close weaker as traders turn to US markets

MANILA, Philippines — The stock market closed the week on a sour note behind recent developments in the US political landscape.

The Philippine Stock Exchange index fell 0.97 percent or 77.26 points to finish at 7,819.22 on Friday.

The broader All Shares index likewise lost 0.85 percent or 40.53 points to settle at 4,728.81.

“Shares slid as traders monitored the latest trade developments and assessed a whistle-blower complaint against President Donald Trump that was released,” said Regina Capital’s Luis Limlingan.

Limlingan said positive statement on China-US trade talk, however, was able to limit losses in the overnight markets.

Local counters were covered in red, with mining and oil being the biggest casualty with a 2.62 percent or 241-point drop. Holding and property counters fell by more than one percent each.

Net foreign selling amounted to P464 million.

Market breadth was negative as decliners pummeled advancers, 133 to 57, while 43 stocks did not change. Value turnover stood at P5.93 billion.

“While we remain a buy on the index, we’ve been flagging the past few days that we would prefer to wait near its recent lows at the 7,620 level. With a lack of catalysts in the local scene in the near-term, movement could likely be dictated by US market movement and foreign flows,” Gabriel Perez of Papa Securities said.

source: philstar.com

Market may climb anew this week

MANILA, Philippines — The stock market may continue to go up this week, sustaining the gains the previous weeks amid the scheduled resumption of US-China trade talks, traders said.

Michael Ricafort, chief economist at Yuchengco-owned Rizal Commercial Banking Corp. (RCBC), sees the index’s next resistance at the 8,000 mark.

“The Philippine Stock Exchange Composite index (PSEi) gained for the third week in four weeks by 58.85 points or 0.7 percent to close at 7,992.32, a new one-month high and also among four-month highs and also among 17-month highs,” Ricafort said.


This, he said, is amid improved global risk appetite recently with the scheduled resumption of the trade talks between the US and China by early October and recent gestures by both countries to improve the said trade talks.

“The next resistance is at 8,000, which is a gateway prior to further upside potential in the near future,” Ricafort said.


Earlier, US President Trump deferred by two weeks the scheduled higher tariffs (which would translate to additional five percent duties) on $250 billion US imports from China. Trump deferred this to Oct. 15 from Oct. 1 to improve the US-China trade talks.

Ricafort said this was a positive signal for the global financial markets.

China also agreed to exempt some US imports from tariffs for about a year starting Sept. 17, which Ricafort said was another positive signal for the markets.

“Trump administration plans to ease sanctions on Iran to help secure a meeting with Iranian leader Hassan Rouhani on the sidelines of the UN General Assembly in New York on Sept. 23. The markets are also anticipating the upcoming Fed rate-setting meeting on Sept. 18 amid possible 0.25 rate cut, which is another factor that could support sentiment in the global financial markets in the coming week,” Ricafort said.

source: philstar.com

Asian stocks mixed as weak dollar weighs on US economic data

SINGAPORE — Asian markets were mixed Thursday as positive sentiment from U.S. economic data and the country's willingness to strike a trade deal with Canada was shaken by a weaker dollar.

KEEPING SCORE: Japan's benchmark Nikkei 225 added 0.2 percent to 22,883.64 and the Kospi in South Korea gained 0.3 percent to 2,316.35. Hong Kong's Hang Seng was 0.4 percent lower at 28,297.41. The Shanghai Composite index fell 0.6 percent to 2,752.13. Australia's S&P/ASX 200 rose 0.3 percent to 6,369.00.



WALL STREET: Gains by big technology companies and Amazon took U.S. indexes higher on Wednesday. Stocks have rallied for four days as investors grew more hopeful about trade talks between the U.S., Mexico and Canada. The S&P 500 index closed 0.6 percent higher at 2,914.04, a record high. The Dow Jones Industrial Average rose 0.2 percent to 26,124.57 and the Nasdaq composite jumped 1 percent to a record 8,109.69. The Russell 2000 index of smaller-company stocks climbed 0.4 percent to 1,734.75.

U.S ECONOMY GROWS: The U.S. economy grew at a strong 4.2 percent annual rate in the April-June quarter, the best showing in nearly four years, the Commerce Department said Wednesday. Strength in business investment offset slightly slower consumer spending, placing growth on track to produce the country's strongest full-year gain in more than a decade. Economists expect growth to slow to a still-solid 3 percent annual rate the rest of the year, resulting in full-year growth of 3 percent for 2018.

POSSIBLE TRADE DEAL: President Donald Trump has said that efforts to reach a deal with Canada in the new North American Free Trade Agreement were "probably on track". The longtime U.S. ally and the country's second-largest trading partner after China had been left out of talks for the past five weeks. Canada has until Friday to reach a deal. Canadian Prime Minister Justin Trudeau said there was a "possibility of getting to a good deal for Canada" by Trump's deadline but said the country will not sign a bad agreement. Mexico, long the target of Trump's ire, has cut a preliminary deal with the United States to replace NAFTA with a pact that's meant, among other things, to shift more manufacturing into the United States.


ANALYST'S TAKE: "The positive impulse seen in the U.S. market has not flown through to Asia. Weakness of the dollar has reversed sentiment in the markets overnight," Michael McCarthy, chief market strategist at CMC Markets in Sydney, said in an interview.

ENERGY: Oil prices have extended their gains on concerns that looming sanctions on Iran may cause supply to drop. Benchmark U.S. crude added 13 cents to $69.64 per barrel in electronic trading on the New York Mercantile Exchange. The contract edged 1.4 percent higher and closed Wednesday at $69.51. Brent crude, used to price international oils, gained 12 cents to $77.58 in London.

CURRENCIES: The dollar eased to 111.63 yen from 111.69 yen. The euro advanced to $1.1703 from $1.1699.

source: philstar.com

Why markets are worried about suddenly cold Turkey

NEW YORK — Why are investors around the world so worried about Turkey's economy, when it's smaller than Florida's? Because of the possibility that somebody bigger will be next.

Investors have been pulling out of Turkey's markets, sending its stock market and currency plunging. That's making debt that Turkish companies owe in dollar terms even more expensive to pay back, which only further weakens the country's financial system.

Turkish companies need to pay close to 5.80 lira for each $1 of debt that they owe, for example, up from 3.79 lira at the start of the year.

The big fear, though, is that the distress could spill over into other emerging markets and cause a cascading wave of losses as investors pull out of other countries that borrow heavily in dollars and are dependent on foreign investors. Argentina? Brazil? South Africa?

Such a thing has happened before. A financial crisis that began in 1997 after Thailand devalued its currency eventually sent markets reeling across the region in what became known as the Asian financial crisis.

Stoking the concerns is the rising US dollar and a Federal Reserve that has pledged to continue raising short-term interest rates. Such moves have historically coincided with pain for emerging market stocks. When US rates are higher, investors feel less need to head to emerging markets in search of higher returns.

Many analysts along Wall Street, though, say they don't expect another Asian financial crisis. Turkey has borrowed much more in foreign currencies than any other country, as a percentage of its economy, and investors question how much authority its central bank has to raise interest rates.

Emerging-market economies broadly are also in much better shape than 20 years ago, with stronger currency reserves, say strategists at Wells Fargo Investment Institute.

"Turkey is both more exposed and less able to do something about it than any other country," says Brad McMillan, chief investment officer for Commonwealth Financial Network.

source: philstar.com

Most Asian markets up but trade fears stalk investors

HONG KONG — Asian markets mostly rose Wednesday, building on a positive start to the week as investors are cheered by healthy earnings but uncertainty caused by the US-China trade row is keeping optimism in check.

Wall Street provided another strong lead with the Nasdaq approaching a record high, while energy firms in Asia pressed on with their rally following more gains in oil prices.

Hong Kong was 0.1 percent higher in early trade while Tokyo ended the morning session 0.4 percent up and Sydney edged 0.3 percent ahead. Seoul, Wellington and Taipei all posted gains but Shanghai dipped 0.6 percent.

While the gains are welcome, traders remain on edge for any new developments in the trade saga between the world's top two economies.

On Tuesday the US said Donald Trump's 25 percent tariffs on a further $16 billion of Chinese goods will kick in on August 23. That is on top of the measures imposed on $34 billion of imports last month.

The move had been widely expected but with China lining up retaliatory measures it reinforced worries that the two sides are heading for an all-out trade war that could hammer the global economy. The White House has also lined up another $200 billion to target in future.

The yuan got some support after a Bloomberg News report said the Chinese central bank had emphasised the need for currency stability to the country's lenders as it looks to halt a slide in recent months.

It said officials called on bosses to prevent "herd behaviour" and momentum-chasing moves in the forex markets, fearing a run on the yuan similar to 2015-16, which hammered the unit and sent global markets into a tailspin.

The report comes after Friday's move by the People's Bank of China to make it harder to bet against the currency.

"This move is consistent with what the PBoC did earlier -- it can be considered as preemptive efforts made to slow the yuan’s depreciation, prevent one-sided bets on weakness and avoid a sense of panic," Eddie Cheung, Asia foreign-exchange strategist at Standard Chartered in Hong Kong, told Bloomberg.

Energy firms remain popular as oil prices rise on the back of worries about the trade row and a drop in Saudi Arabian output.

Both main contracts were flat in Asia after clocking up big gains on Tuesday.

Prices also got support from the US reimposing a first round of sanctions on Tehran after leaving the nuclear deal, with an embargo on the country's crude exports in November.

Trump warned other countries against doing business with Iran in the face of the sanctions, saying they would be refused from trading with the United States.

"The entreaty of the Americans that anyone who will do business with them (Iran) won't be able to do business in the US is something to watch," said Greg McKenna, chief markets strategist at AxiTrader.

Key figures at 0230 GMT

Tokyo - Nikkei 225: UP 0.4 percent at 22,750.48 (break)

Hong Kong - Hang Seng: UP 0.1 percent at 28,282.28

Shanghai - Composite: DOWN 0.5 percent at 2,764.45

Euro/dollar: UP at $1.1602 from $1.1597 at 2130 GMT

Pound/dollar: DOWN at $1.2936 from $1.2938

Dollar/yen: UP at 111.40 yen from 111.37 yen

Oil - West Texas Intermediate: UP five cents at $69.22 per barrel

Oil - Brent Crude: DOWN seven cents at $74.58 per barrel

New York - Dow Jones: UP 0.5 percent at 25,628.91 (close)

London - FTSE 100: UP 0.7 percent at 7,718.48 (close)

source: philstar.com

China loses spot as world's No.2 stock market: Bloomberg

SHANGHAI — China's stock market has been overtaken as the world's second-biggest by Japan's, having been swiped this year by the threat of a trade war with the United States and slowing economic growth.

Data from Bloomberg News in intra-day trade on Friday showed the value of equities on the mainland had slipped behind those in their neighbouring country for the first time since taking the number-two spot in 2014.

The figures showed Chinese stocks were worth $6.09 trillion, compared with $6.17 trillion in Japan. The US market is worth $31 trillion.

While global markets have been broadly hit by fears of a trade war between the world's top two economies, Chinese equities are among the worst performers this year, with the benchmark Shanghai Composite Index slumping more than 16 percent since the start of January.

The pressure was ratcheted up this week when the White House said it was considering more than doubling threatened tariffs on a range of Chinese imports worth $200 billion.


Washington has already imposed tariffs on $34 billion worth of goods and is considering hitting another $16 billion in the coming weeks.

"Losing the ranking to Japan is the damage caused by the trade war," Banny Lam, head of research at CEB International Investment in Hong Kong, told Bloomberg News.

"The Japan equity gauge is relatively more stable around the current level but China's market cap has slumped from its peak this year."

Adding to the selling has been a string of data indicating economic growth is slowing, while Beijing has embarked on a drive to cut a worryingly large debt mountain as well as reduce pollution.

Also worrying investors are the yuan's recent losses, with the currency at its lowest level against the dollar for more than a year, while traders have been mostly unmoved by government measures and promises to support the economy.

At the same time, Japanese corporate results have been broadly upbeat, providing some support to markets there, though the Nikkei is still slightly down this year.

"Investors are paying attention to government policies as the US-China trade war will remain uncertain for now," Yoshihiro Okumura, general manager at Chibagin Asset Management, told AFP in Tokyo.

"On the other hand, Japanese companies are showing strong results in general, sustaining share prices on the Tokyo Stock Exchange."

However, he added: "The Tokyo market is not in top form. The country is also subject to the trade war as it is heavily relying on global trade."

Chinese stocks have been on a rollercoaster since taking the second spot in 2014.

Fuelled by risky investing by individual investors looking for a quick profit, the market surged through early 2015 to hit a high of $10 trillion, but then the bubble burst and it went into a downward spiral, with the Shanghai composite crashing about 40 percent.

source: philstar.com

Asian stocks rise as solid US performance lifts spirits

SINGAPORE — Asian markets climbed higher on Wednesday as a sweep of positive news from Wall Street and beyond boosted confidence in the U.S. economy.

KEEPING SCORE: Japan's benchmark Nikkei 225 gained 1.0 percent to 22,921.20 and South Korea's Kospi added 0.3 percent to 2,304.64. Hong Kong's Hang Seng gained 0.6 percent to 28,351.53. The Shanghai Composite index added 0.4 percent to 2,808.24. Australia's S&P/ASX 200 climbed 0.8 percent to 6,254.20. Shares rose in Taiwan and Southeast Asia.

WALL STREET: U.S indexes rebounded after a weak start on solid gains for retailers, technology and household goods companies. Prescription drug business Johnson & Johnson and financial services company Charles Schwab posted bullish earnings, adding to the largely positive corporate earnings season. The S&P 500 index rose 0.4 percent to 2,809.55. The Dow Jones Industrial Average gained 0.2 percent to 25,119.89. The Nasdaq composite jumped 0.6 percent to 7,855.12, surpassing the record high it set last week. The Russell 2000 index of smaller-company stocks climbed 0.5 percent to 1,687.26.

UPBEAT FED COMMENT: Delivering his twice-a-year report on monetary policy to Congress, Federal Reserve Chairman Jerome Powell said he expects the job market to remain robust and inflation to hover around the Fed's 2 percent target for the next few years. Stocks have fallen after Powell's previous major addresses, but not on Tuesday.

U.S. INDUSTRIAL PRODUCTION: The Fed said U.S. industrial production, including output at factories, mines and utilities, climbed 0.6 percent in June. It fell 0.5 percent in May after a fire disrupted production of Ford Motor's F-series pickup trucks, America's bestselling vehicle. U.S. manufacturing still looks healthy despite trade conflicts with China, Europe and Canada and a rising dollar that makes U.S. products more expensive abroad.

ANALYST VIEWPOINT: "While earnings and the highly-watched testimony to Senate by Fed chair Powell played a part, movements remained largely muted with the likes of the Dow and the S&P 500 index clocking only moderate gains overnight," Jingyi Pan of IG said in a commentary.

ENERGY: Benchmark U.S. crude dropped 34 cents to $67.74 per barrel in electronic trading on the New York Mercantile Exchange. The contract was relatively unchanged at $68.08 in New York on Tuesday. Brent crude, used to price international oils, shed 30 cents to $71.86 per barrel.
CURRENCIES: The dollar rose to 112.95 yen from 112.83 yen late Tuesday. The euro eased to $1.1654 from $1.1664.

source: philstar.com

Asian stocks dip as trade tensions weigh on US tech sector

SINGAPORE — Asian markets were mostly lower on Tuesday, as moves by the U.S to gain an upper hand on trade with China weighed on the technology sector. Tech stocks have been the pillar of the Wall Street's long-running bull market.

KEEPING SCORE: Japan's benchmark Nikkei 225 index dropped 0.5 percent to 22,221.33 and South Korea's Kospi lost 0.9 percent to 2,337.60. Hong Kong's Hang Seng shed 1.2 percent to 28,619.21 and the Shanghai Composite in mainland China slipped 0.6 percent to 2,842.22. Australia's S&P/ASX 200 dipped 0.4 percent to 6,186.40. Taiwan's benchmark fell and Southeast Asian indexes were mostly lower.

WALL STREET: Major U.S. benchmarks finished broadly lower. The S&P 500 index dropped 1.4 percent to 2,717.07, its worst loss since April 6. The Dow Jones industrial average fell for the ninth time in 10 days, losing 1.3 percent to 24,252.80. The Nasdaq composite shed 2.1 percent to 7,532.01. The Russell 2000 index of smaller-company stocks slid 1.7 percent to 1,657.51.


TECH DOWNTURN: Stocks tumbled on reports that the Trump administration plans to limit exports of some high-tech products to China, and also limit investment in technology firms by companies with substantial Chinese ownership. Treasury Secretary Steven Mnuchin's suggestion that the investment restrictions wouldn't be limited to China caused stocks to slide further. The market recovered when Peter Navarro, one of President Donald Trump's top trade advisors, told CNBC that there was no plan for investment restrictions and that the administration's probe into alleged technology theft is limited to China. All but one of the 72 technology companies listed on the S&P 500 index closed lower on Monday.

TRADE TENSIONS: U.S. efforts to secure a pole position in trade are seeing some hit back. Iconic American motorcycle maker Harley-Davidson said it would move some production overseas to avoid tariffs the European Union is placing on motorcycles made in the U.S. Those tariffs were a response to taxes the U.S. placed on steel and aluminum from Europe. In less than two weeks, a 25 percent tariff will be imposed by the U.S. on billions of dollars of Chinese products. China will also raise import duties on $34 billion worth of American goods. China and the European Union agreed on Monday to launch a group that will, among other things, preserve support for international trade amid U.S. threats of import controls.

ANALYST'S TAKE: "Fears that China may pull investments in U.S. tech firms have caused a broad drawback. There is a sense that trade tensions could be long drawn and somewhat more antagonistic going forward," said Vishnu Varathan, head of economics and macro strategy at Mizuho Bank.
ENERGY: OPEC countries have agreed to raise the supply of crude oil by 1 million barrels a day. But investors aren't sure if the cartel will carry it out. Benchmark U.S. crude gained 7 cents to $68.15 per barrel in New York. It dipped 0.7 percent to settle at $68.08 per barrel on Monday. Brent crude, used to price international oils, rose 5 cents to $74.60 per barrel in London.

CURRENCIES: The dollar remained at 109.45 yen from late trading Monday. The euro strengthened to $1.1718 from $1.1704.

source: philstar.com

Asian stocks take a breather from trade tensions; markets up

SINGAPORE — Asian markets were mostly higher on Wednesday as traders sidelined tariffs that the U.S. and China have threatened to impose on one another, focusing on positive housing data instead.

KEEPING SCORE: Japan's benchmark Nikkei 225 index rose 1.2 percent to 22,540.07 and South Korea's Kospi gained 1.4 percent to 2,373.50. Hong Kong's Hang Seng rebounded 1.5 percent to 29,908.50 and the Shanghai Composite in mainland China increased 0.4 percent to 2,918.60. Australia's S&P/ASX 200 climbed 1.1 percent to 6,166.40. Taiwan's benchmark rose but Southeast Asian indexes were mixed.

U.S-CHINA TARIFFS: A burgeoning trade war between the U.S. and China is showing no signs of abating. On Tuesday, China's government called President Donald Trump's threat of new tariffs on $200 billion of Chinese goods "blackmail" and warned to retaliate with measures of its own. Trump has already announced a 25 percent tariff on up to $50 billion of Chinese products starting July 6. China retaliated by raising import duties on $34 billion worth of American goods, including soybeans, electric cars and whiskey.


POSITIVE HOUSING DATA: The solid U.S. job market has helped to boost demand for new homes. The Commerce Department said housing starts rose to a seasonally adjusted annual rate of 1.35 million in May, the strongest pace since July 2007. All of May's construction gains came from a 62 percent jump in the Midwest, while building slumped in the Northeast, South and West.


QUOTEWORTHY: "Trade tension is going to dominate market sentiment in the weeks to come. The market is waiting for Beijing to come out with counter measurements to offload more chips," said Margaret Yang, market analyst at CMC Markets Singapore.

WALL STREET: Major U.S. benchmarks finished lower. The S&P 500 index dropped 0.4 percent to 2,762.57 and the Dow Jones industrial average lost 1.1 percent to 24,700.21. The Nasdaq composite dipped 0.3 percent to 7,725.59.

ENERGY: Oil futures recovered losses from the previous day ahead of an OPEC meeting on Friday. Saudi Arabia and Russia are seeking to raise production by 1.5 million barrels per day, but they may not get their way. Benchmark U.S. crude rose 38 cents to $65.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract settled at $64.90 per barrel on Tuesday. Brent crude, used to price international oils, gained 32 cents to $75.40 in London.
CURRENCIES: The dollar rose to 110.19 yen from 110.07 yen in late trading Tuesday. The euro ticked up to $1.1579 from $1.1575.

source: philstar.com

Malaysia, Indonesia markets roiled as investors scramble for hedge on Trump

JAKARTA -- Emerging markets in Southeast Asia were slammed on Friday as the stunning upset of Donald Trump's presidential win in the United States reverberated around the world, with Malaysia and Indonesian central banks intervening to try to stem the flow of money out of stocks and bonds.

The latest selloff was triggered by markets recalibrating their expectations of a Trump presidency on broad economic policy, with a growing consensus that his policies will be inflationary and push US rates up driving investors out of emerging markets and into dollar-based assets.

Yields on benchmark 10-year Treasuries have spiked 41 basis points in the past two days as investors scrambled to readjust their positions.

Emerging markets in Asia are particularly vulnerable to hot money outflows, and deep uncertainty over how broad US and international policy will ultimately play out under Trump has unsettled investors.

On Friday's Asian session, the differential between the onshore spot rate in the Malaysian ringgit and the offshore NDF rate spread hit its widest since 2009.

Ringgit one-month non-deliverable forwards plunged to 4.5280 per dollar, while spot ringgit stood at 4.2670. As a result, the dollar/ringgit's NDFs premium over the dollar/ringgit spot widened to 0.2610, the widest since at least April 2008, according to Reuters data.

The subdued spot rate belied the drama because Bank Negara Malaysia was acting to stem any panic, traders said.

Malaysia's central bank governor Muhammad Ibrahim told reporters on Friday the ringgit should not be priced out of sync with fundamentals, and that it has a responsibility to tell banks to take temporary measures to calm the market

"We don't want to be dictated by factors that have nothing to do with the country's fundamentals," Ibrahim said.

Traders in Kuala Lumpur said the central bank had told them not to quote offshore rates and was approving large ringgits sell orders on a one-off basis in a bid to keep a lid on things. The tactic seemed to work with onshore trade reportedly very thin.

Hot money headache

However, yields on Malaysian government bonds told another story. Yields on 10-years have widened 22 basis points since Wednesday, while those on 20-year and 30 year bonds have widened 21 basis points and 10 basis points respectively over the same period.

Almost 40 percent of Malaysian government bonds are in foreign hands.

Malaysian stocks were down almost one percent.

Indonesian markets also dived in early trade. Indonesia has enjoyed relatively high inflows into stocks and bonds markets in the past few months, making it vulnerable to hot money outflows at times of uncertainty.

The rupiah  fell as much as 2.7 percent, while Jakarta Composite Index fell as much as 3.2 percent to its lowest since Sept 16.

Bank Indonesia sold dollars to stabilize the currency, traders said, but it still fell to a four-month low.

Nanang Hendarsah, an official at BI, said the rupiah's sharp drop was caused by sudden hedging activity in the NDF market, but noted outflows from Indonesian markets were contained so far.

Yield of Indonesia's 10-year government bonds jumped on Friday to 7.462 percent from 7.417 percent. Foreigners own 38.4 percent of outstanding Indonesian government bonds.

Philippine stocks were also caught in the selloff with the main index tumbling more than 2.5 percent. The Philippines peso, however, was steady at 48.99.

The short term might prove a head-spinning affair for investors, especially for those in emerging markets.

"With the market now pricing in low expectations of further US Federal Reserve rate hikes beyond the one expected in December, Mr. Trump’s economic policies present an upside risk to rates," said Khoon Goh, head of Asia research at ANZ.

"This, coupled with the depreciation pressure on Asian currencies, has put serious pressure on Asia’s carry trades."

source: interaksyon.com

US stocks plunge after global rout

NEW YORK - US stocks slumped Monday, the first trading day of 2016, as heavy sell-offs in global markets and geopolitical tensions between Iran and Saudi Arabia rattled nervous investors.

The Dow Jones Industrial Average tumbled 276.09 points, or 1.58 percent, to 17,148.94. The S&P 500 dropped 31.28 points, or 1.53 percent, to 2,012.66. The Nasdaq Composite Index shed 104.32 points, or 2.08 percent, to 4,903.09.

China's shares tumbled 7 percent Monday, triggering the new "circuit breaker" mechanism. The decline is generally being attributed to downbeat market sentiment stemming from weaker than expected manufacturing activity in December and a steep fall in the yuan exchange rate on the day.

The Caixin General China Manufacturing Purchasing Managers' Index (PMI), released Monday, edged down to 48.2 in December from 48.6 in November. The December reading, the 10th monthly figure in a row below the 50-point level, suggests a contraction.

Tokyo stocks plunged on the first trading day of the New Year as below-par manufacturing data from China compounded a dour market mood, with sentiment initially dashed by Wall Street's slump at the end of last year.

European equities also suffered big losses following Asian stocks' sharp decline Monday, with Germany's benchmark DAX index at Frankfurt Stock Exchange diving 4.28 percent.

Meanwhile, Saudi Arabia cut off diplomatic ties with Iran over the weekend and asked all Iranian diplomats to leave the country within 48 hours.

Analysts said the heightened geopolitical tensions in the Middle East sent traders scurrying from stocks to safe haven assets.

On the economic front, the US December ISM Manufacturing Index moved down from November's 48.6 to 48.2, missing market expectations of 49.2, said the Institute Supply Management Monday.

"That the manufacturing sector was weak in 2015 is not news, but a weaker-than-expected reading to close the year raises concerns the slowdown may continue well into 2016," said Jay Morelock, an economist at FTN Financial.

US construction spending data also came out disappointing. The Commerce Department announced Monday that construction spending during November 2015 was estimated at a seasonally adjusted annual rate of US$1,122.5 billion, 0.4 percent below the revised October estimate.

source: interaksyon.com

Weak Chinese trade, US rate hike fears sink global stocks

NEW YORK - Another contraction in Chinese trade and rising expectations of a US interest rate hike in December sent most global markets tumbling Monday.

China's 18.8-percent fall in imports from a year ago, and a 6.9 percent drop in exports, spelled more sluggishness in the world's second-largest economy and in global growth more generally, hitting commodity prices as well as the shares of companies like Caterpillar which depend on them.

Supporting that view, the Organisation for Economic Co-operation and Development on Monday cut its forecast for global growth to 2.9 percent this year and 3.3 percent in 2016, calling the stagnation in global trade "deeply concerning".

On top of that was the strong US jobs data on Friday that gave more support for the US Federal Reserve hiking interest rates for the first time in nine years, which would raise the borrowing costs of governments and companies around the world.

Wall Street's key indices all tumbled 1.0 percent with little to spur buying after six straight weekly gains.

Mace Blicksilver of Marblehead Asset Management said US investors have a number of concerns, and that the market was "probably stronger than it should have been" last week.

"A little weak China data didn't help," he added.

European markets fell as brokers pondered the impact of higher US rates and slower global growth. London's FTSE dipped 0.9 percent, Frankfurt's DAX 30 lost 1.6 percent and Paris' CAC 40 dropped 1.5 percent.

Friday's strong US jobs report "pretty much made it a given that a US rate hike will take place after all in 2015," said Markus Huber, senior analyst at broker Peregrine & Black.

Ironically Chinese shares pushed higher, buoyed by news that the government was lifting a four-month ban on IPOs.

Chen Jiahe of Cinda Securities said regulators were more comfortable "after leveraged funding through outside channels was cleared and investor confidence recovered."

The dollar stabilized after last week's surge on the rate expectations, trading at 123.18 yen and $1.0749 per euro in late deals.

Still, said Joe Manimbo of Western Union Business Solutions, "market focus on monetary policies that are expected to loosen in Europe and tighten in the US suggests more open road for the dollar to run over the foreseeable future."

The key figures around 2200 GMT

New York - Dow:            DOWN 1.0 percent at 17,730.48 (close)

New York - S&P 500:     DOWN 1.0 percent at 2,078.58 (close)

New York - Nasdaq Composite:    DOWN 1.0 percent at 5,095.30 (close)

London - FTSE 100:       DOWN 0.9 percent at 6,295.16 (close)

Frankfurt - DAX 30:        DOWN 1.6 percent at 10,993.241 (close)

Paris- CAC 40:               DOWN 1.5 percent at 4,911.17 (close)

EURO STOXX 50:           DOWN 1.4 percent at 3,418.36 (close)   

Tokyo - Nikkei 225:      UP 2.0 percent at 19,642.74  (close)

Euro/dollar:                    UP to $1.0748 from $1.0742 late Friday

Dollar/yen:                     UP to 123.19 yen from 123.16 yen late Friday

source: interaksyon.com

Asian stocks set for worst monthly drop in three years on global rout

HONG KONG - Asian shares fell on Monday and looked set for their worst monthly performance in three years after top Federal Reserve officials kept the door open for an interest rate hike in September and Chinese stock markets took a fresh tumble.

Global markets are bracing for Chinese data on Tuesday which is expected to show the world's second-largest economy is continuing to lose momentum.

A Reuters poll showed China's official factory sector activity likely fell to a 3-year low.

U.S. business surveys, factory orders, trade data and non farm payrolls will also be released this week, keeping investors on edge after one of the wildest trading weeks of the year.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.8 percent and is set to fall 10 percent this month, its worst monthly drop since May 2012.

Japan's Nikkei was down more than 1 percent and South Korea's Kospi shed 0.6 percent. Australian shares lost 1.2 percent.

Selling intensified as China markets extended declines. By midmorning, Shanghai stocks, the epicenter of this month's whip-saw action, were down 3 percent. They have plunged more than 40 percent since mid-June.

U.S. stock futures shed 1 percent, pointing to weakness on Wall Street later in the day.

"Overall sentiment towards emerging markets continue to be quite cautious," said Frances Cheung, Asia strategist at Societe Generale in Hong Kong.

"Unless we see a decisive trend forward in the trajectory of U.S. interest rates, investors will continue to be wary of emerging market assets."

U.S. Federal Reserve Vice Chairman Stanley Fischer, speaking at the central bank's conference in Wyoming, said recent volatility in global markets could ease and possibly pave the way for a rate hike.

"The release of U.S. ADP employment on Wednesday and non-farm payrolls on Friday will be key in analyzing the quantum of a September rate hike," Angus Nicholson, market analyst at trading services provider IG in Melbourne, wrote in a note to clients.

Prospects of higher interest rates and returns in the United States combined with China's slowdown have diminished the appeal of emerging markets as investors have dumped riskier assets.

Investors sold $5.9 billion of emerging market assets between Aug 20-26, a sharp increase from $1.5 billion the week earlier, according to Nomura fund flows data.

Credit markets, often a harbinger of things to come for equities, spelt further pain in store for emerging markets.

An index for Asian high-yield credit has fallen sharply compared to a relatively steady performance in the investment grade index, according to Thomson Reuters data.

The dollar eased 0.4 percent to 121.15 yen after rising to the week's high of 121.76 on Friday following the Fed officials' comments that kept prospects of a September hike alive.

The euro was up 0.5 percent at $1.12405  after touching an eight-day low of $1.1156 on Friday.

The market will watch Thursday's policy meeting to see if the European Central Bank will be inclined to ease monetary policy further in the wake of the recent global markets turmoil, though no imminent change is expected.

U.S. crude oil prices dipped early on Monday as their biggest two-day surge in quarter of a century ran its course.

U.S. crude was down 0.8 percent at $44.86 a barrel after jumping more than 6 percent on Friday on frenetic short-covering fueled by violence in Yemen, a storm in the Gulf of Mexico and refinery outages.

The contract was still down nearly 5 percent on the month, when it hit a 6-1/2-year low last week in the wake of China-led global growth fears.

source: interaksyon.com