Commerse, Trading and Savings :: Market news

Asia stocks skittish as investors seek shelter before Trump Xi meeting

´╗┐Asian shares inched lower on Tuesday as caution reigned ahead of a potentially tense meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping later this week. The dollar lost ground after investors sold stocks overnight and looked to safe havens as political uncertainty overshadowed positive U.S. economic data and solid growth in global manufacturing. European markets were also set for a subdued start, with financial spreadbetter CMC Markets predicting Britain's FTSE 100 will open 0.1 percent higher, and Germany's DAX and France's CAC 40 will start the day flat. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 percent. Japan's Nikkei slumped 1.1 percent as automakers tumbled on weaker-than-expected U.S. sales and investors sought out the safe-haven yen. Toshiba Corp, the worst performer on the index, tumbled 9.5 percent after sources said the company will meet creditor banks on Tuesday to ask them to accept as collateral shares in some of its businesses, including its soon-to-be split-off memory unit, in exchange for not calling in their loans. Australian shares slid 0.3 percent after the central bank voted to hold rates steady at a record low 1.5 percent as expected, while pointing out that growth in household borrowing, largely to buy housing, is outpacing increases in household income. Earlier in the day, the statistics bureau reported an expansion in the country's February trade surplus to more than double the previous month's as exports of gold and minerals rebounded, while imports dropped. The Australian dollar was 0.3 percent weaker at $0.7585.

China, Hong Kong, Taiwan and India were closed for holidays. Adding to market jitters was an attack by a suspected Islamic suicide bomber on a metro train in St. Petersburg, Russia, that killed 11 people and injured 45. "Certainly a reaction had been seen towards the metro bomb at St. Petersburg," Jingyi Pan, market strategist at IG in Singapore, wrote in a note. The meeting between Trump and Xi will also "have due influence upon Asian markets and I would not be surprised if traders choose to stay on the side-lines to ride out these events." Overnight, U.S. stock indexes closed in the red, albeit having recovered some of the day's losses, after Trump held out the possibility of using trade as a lever to secure Chinese cooperation against North Korea in an interview with the Financial Times on Sunday.

Last week, Trump tweeted that the highly anticipated meeting, which is also expected to cover differences over trade, North Korea and China's strategic ambitions in the South China Sea, "will be a very difficult one." That has kept investors on edge, knocking riskier assets and forcing investors into safe assets such as the yen, gold and Treasuries. Data showing U.S. construction spending grew 0.8 percent to $1.19 trillion, the highest since April 2006, failed to provide a sustained boost in sentiment, while a deceleration in U.S. auto sales in March reinforced investors' unease. Manufacturers across Europe broadly and much of Asia had solid growth in March, making for a strong quarter overall, business surveys showed, but the rise of U.S. protectionism is keeping both investors and companies wary. European stock markets hit a 16-month high on Monday but failed to hold on to the gains as risk aversion returned. The pan-European STOXX 600 index closed down 0.5 percent.

The 10-year U.S. Treasury yield fell to 2.3318. It touched a five-week low of 2.321 overnight."The dollar is feeling pressure against the yen from an interest rate spread point of view," said Shin Kadota, senior strategist at Barclays in Tokyo. The dollar dropped 0.4 percent to 110.42 yen in its third straight session of losses. The dollar index, which tracks the greenback against a basket of six trade-weighted peers, fell 0.1 percent to 100.43, despite touching a 2-1/2-week high in the previous session. The euro was steady at $1.0672. In commodities, crude failed to recover from overnight losses on a rebound in Libyan output and an increase in U.S. drilling rig capacity, both of which exacerbated concerns about a glut. U.S. crude was unchanged at $50.24 a barrel, while global benchmark Brent was flat at $53.13. Gold prices hit a one-week high before pulling back a little to trade 0.2 percent higher at $1,255.89 an ounce.

Asian shares at 15 month high, dollar soft on less hawkish Fed

´╗┐Asian shares hit 15-month highs on Tuesday while the dollar and U.S. bond yields were on the back foot on the prospect of a less-hawkish Federal Reserve policy trajectory. MSCI's broadest index of Asia-Pacific shares outside Japan . MIAPJ0000PUS rose 0.4 percent to 15-month highs, with tech-heavy Seoul and Taipei shares . KS11 . TWII hitting two-year highs while Hong Kong's Hang Seng . HSI scaled 1 1/2-year highs. Japan's Nikkei . N225 dropped 0.3 percent, weighed by financial stocks, which were hurt by lower U.S. yields and exporter stocks, which fell on the yen's gains against the dollar. While Asian shares have been supported by signs of strong global economic growth, concerns about protectionism cast a shadow after financial leaders of the world's biggest economies dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States. Wall Street shares drifted lower on Monday as investors worried that President Donald Trump's plan to cut taxes and boost the economy could take longer than earlier expected."Any fiscal spending by the Trump administration will not come until August at earliest and probably much later. So any economic benefit of that will show up only next year," said a senior trader at a European bank."So the markets are gradually pricing that in, winding back their initial rally after the elections."Although Trump promised in early February to deliver a "phenomenal" tax plan within a few weeks, no such details have been released yet.

"U.S. stocks valuations are getting really expensive, so I expect the market to be capped for now. That also means Japanese shares are unlikely to gain further," said Tatsushi Maeno, senior strategist at Okasan Asset Management. Expectations that the Federal Reserve will have to step up rate hikes to counter inflationary pressure from Trump's stimulus are also waning after the Fed dropped no hints of an acceleration in credit tightening last week. Chicago Federal Reserve President Charles Evans, in one of the first official comments after the Fed raised rates as expected last week, reiterated that message on Monday. He said that two more interest rate hikes this year were likely, disappointing investors who had anticipated rates to be increased more quickly. Evans's comments helped to bring down the 10-year U.S. Treasuries yield US10YT=RR to 2.461 percent, its lowest level in two weeks. It last stood at 2.479 percent.

Lower yields undermined the greenback's allure, softening the dollar to three-week lows near 112.26 yen JPY= in early Asian trade. The euro EUR= ticked up to $1.0758, near Friday's six-week high of $1.07825, maintaining its gains made last week after a election defeat for Dutch far-right leader Geert Wilders, which eased broader fears of a populist drift in European politics. In France, centrist Emmanuel Macron solidified his status as front-runner in the presidential election in a televised debate on Monday."At the moment, worries about the election have subsided a bit after the Dutch elections. But I expect the market to become more nervous near the election, given last year's experiences (with Brexit and the U.S. elections)," said Kazushige Kaida, head of foreign exchange at State Street.

The dollar's index against a basket of six major currencies . DXY =USD stood at 100.26, after hitting a six-week low of 100.02 on Monday. The spectre of slower U.S. rate hikes has been helping high-yielding currencies. The Australian dollar AUD=D4 traded at $0.7706, after hitting a 4-1/2-month high of $0.7748 on Monday. It has risen 2.0 percent since the Fed's policy meeting last week. The South African rand ZAR=D4 has gained 4.0 percent since then to a near 1-1/2-year high while the Brazilian real rose 3.2 percent BRL=. Oil prices rose in Asia on expectations that an OPEC-led production cut to prop up the market could be extended. Prices for front-month Brent crude futures LCOc1, the international benchmark for oil, gained 0.4 percent to $51.83 per barrel. OPEC members increasingly favour extending the output curb beyond June to balance the market, sources within the group said, although they added that this would require non-OPEC members such as Russia to also step up their efforts.