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Asian markets sink at end of healthy week, dollar up
HONG KONG, Nov 9, 2018 (BSS/AFP) – Asian markets turned lower Friday as
investors took their foot off the pedal at the end of a broadly positive
week, while the dollar strengthened after the Federal Reserve flagged more
interest rate hikes down the line.
Energy firms were among the biggest losers as oil prices fell into a bear
market after dropping 20 percent from their recent highs.
The US midterms provided a much-needed fillip to equities as traders bet
that the expected gridlock on Capitol Hill would keep Donald Trump from
pushing through measures that would likely stoke inflation and in turn rate
hikes.
Rising US borrowing costs have been one of the major issues weighing on
global equities this year.
However, after its latest policy meeting Thursday the Fed repeated that it
expected “further gradual increases” in the key interest rate as the economy
goes from strength to strength.
The central bank said growth “has been rising at a strong rate”, jobs were
picking up, unemployment dropping and household spending “growing strongly”.
While it did not lift rates, observers said another move upwards next
month was very likely.
US markets closed mostly lower, with Asian equities following suit.
Tokyo ended down 1.1 percent. Hong Kong shed 2.4 percent and Shanghai
finished 1.4 percent lower after data showed another drop in Chinese factory
prices, while tech firms were hit by a series of weak earnings results from
mainland firms.
“China producer’s inflation is cooling as manufacturing activity is
receding damping price pressures on raw commodities, yet another casualty of
US-China trade wars,” said Stephen Innes, head of Asia-Pacific trade at
OANDA. “The decline in the PPI underscores increased economic pressures.”
Sydney eased 0.1 percent, Singapore sank 0.6 percent and Seoul was off 0.3
percent. Taipei and Jakarta were both down more than one percent.
The dollar, which turned lower after the election results, picked up
against most other currencies in New York and continued that trend in Asia,
with emerging market and other higher-yielding units sharply lower.
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– Peso drops –
“There is a sense that for now US-related incentives have all come out.
But of course, the US-China summit talks at the end of the month require
attention,” Mizuho Securities said in a note.
“We expect the market’s attention for this month will go to Europe,” with
the region’s overall growth, Italian fiscal conditions, and Brexit talks in
focus, Mizuho added.
The Mexican peso plunged more than one percent after president-elect
Andres Manuel Lopez Obrador introduced plans to slash the fees banks can
charge clients. The leftist has worried the business sector with rhetoric
about overhauling Mexico’s economic model when he takes office on December 1.
The pound is attracting attention as a deadline approaches for Britain and
the EU to reach a post-Brexit deal, with speculation the two sides are close
to an agreement.
Energy firms were deep in negative territory after another sharp sell-off
in oil Thursday, which came on the back of data showing a surge in US
stockpiles.
Crude has taken a battering since hitting four-year highs last month as
rising production, the brewing China-US trade war and easing concerns about
the impact of sanctions on Iran. Both main oil contracts were down Friday.
“Certainly, the waivers on US sanctions for Iranian crude have really
accelerated the decline from last month and sensitivity to those issues have
been high in recent times,” Daniel Hynes, a senior strategist at Australia &
New Zealand Banking Group, said.
The increases in US stockpiles “add to rising concerns of output”. He
added that traders will be following a weekend meeting between OPEC and
Russia.
Among the worst-hit energy firms were CNOOC, which lost four percent in
Hong Kong, while Tokyo-listed Inpex sank 3.9 percent and Australia’s Woodside
Petroleum dropped 1.3 percent.
European stocks retreated at the open Friday as a midweek rally faded
further. London and Paris both slid 0.6 percent, while Frankfurt fell 0.3
percent in early trading.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: DOWN 1.1 percent at 22,250.25 (close)
Hong Kong – Hang Seng: DOWN 2.4 percent at 25,601.92 (close)
Shanghai – Composite: DOWN 1.4 percent at 2,598.87 (close)
Euro/dollar: DOWN at $1.1344 from $1.1364 at 2200 GMT
Pound/dollar: DOWN at $1.3022 from $1.3063
Dollar/yen: DOWN at 113.79 yen from 114.07 yen
Oil – West Texas Intermediate: DOWN 37 cents at $60.30 per barrel
Oil – Brent Crude: DOWN 18 cents at $70.47 per barrel
New York – Dow: FLAT at 26,191.22 (close)
London – FTSE 100: DOWN 0.6 percent at 7,100.07
BSS/AFP/HR/1500