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Asian markets build on gains, dollar faces further weakness
HONG KONG, Jan 3, 2018 (BSS/AFP) – Asian equities continued their positive
start to the year on Wednesday following yet another record close on Wall
Street, but the dollar faced further selling pressure.
Analysts warned global markets could face an uncertain year as Donald
Trump’s tax cuts have already been priced into valuations, while central
banks are also on course to start winding back on their years of cheap money.
Investors have kicked 2018 off in buoyant mood as the world economy stirs
to life and jobs creation, particularly in the US, picks up.
After Tuesday’s broad advances, Asia was given a strong lead from Wall
Street where technology firms were the standout performers with Apple, Amazon
and Google-parent Alphabet all gaining close to two percent.
The tech-rich Nasdaq and the S&P 500 ended at all-time highs while the Dow
ended just shy of a new record.
In early trade Hong Kong and Shanghai were each up 0.4 percent, Sydney
added 0.2 percent and Singapore put on 0.3 percent.
Seoul rose 0.3 percent, Wellington was 0.4 percent higher and Taipei
jumped 0.8 percent. Tokyo was closed for a public holiday.
Tech firms were among the big winners, with AAC Technologies up three
percent in Hong Kong, adding to Tuesday’s 7.5 percent jump, while Tencent
rose two percent. Samsung climbed one percent in Seoul.
– ‘Punchbowl’ –
Greg McKenna, chief market strategist at AxiTrader, warned: “The punchbowl
is going to be taken away this year and for the first year in many neither
the Federal Reserve nor European Central Bank, and perhaps even the Bank of
Japan, will be injecting free cash into the global monetary system.
“It’s a risk that I strongly believe is under appreciated and underpriced
in markets at the moment.”
The dollar weakened further, with market-watchers pointing to the fact
that central banks outside the US would be winding down their stimulus,
bringing them into line with the Fed, which has been tightening for more than
a year.
MORE/MR/ 0947 hrs
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The euro was testing three-year highs, while the pound is on course to hit
its best mark since mid 2016, which Britain voted to leave the European
Union.
“The backdrop for the dollar is just not very good,” Mark McCormick, head
of FX strategy for North America at Toronto Dominion Bank, told Bloomberg
News. “The global reflation trade is progressing along.”
Oil prices edged up as traders keep an eye on events in Iran, where
protesters have taken to the streets over economic grievances, fuelling
concern about the supplies from the crude-rich country.
The unrest has prompted accusations from Tehran of outside interference by
the US and Saudi Arabia, and there are worries of an escalation in tensions
the powderkeg region.
“We need to watch what happens because the geopolitical risk is genuinely
a factor once more in global oil markets,” said McKenna.
– Key figures around 0240 GMT –
Hong Kong – Hang Seng: UP 0.4 percent at 30,638.94
Shanghai – Composite: UP 0.4 percent at 3,360.02
Tokyo – Nikkei 225: Closed for a holiday
Euro/dollar: UP at $1.2062 from $1.2055 at 2145 GMT
Pound/dollar: UP at $1.3599 from $1.3594
Dollar/yen: UP at 112.30 yen from 112.28 yen
Oil – West Texas Intermediate: UP six cents at $60.43 per barrel
Oil – Brent North Sea: UP three cents at $66.60
New York – DOW: UP 0.4 percent at 24,824.01 (close)
London – FTSE 100: DOWN 0.5 percent at 7,648.10 (close)
BSS/AFP/MR/ 0947hrs