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Tokyo stocks rebound after Christmas slump
HONG KONG, Dec 26, 2018 (BSS/AFP) – Japanese stocks recovered slightly on
Wednesday after suffering their worst finish in almost two years, but other
Asian markets were mixed after President Donald Trump marked Christmas with a
renewed attack on the central bank.
Tokyo plummeted to a 20-month low on Tuesday on fears over the US economy
and a government shutdown. That came after a brutal run on Wall Street that
saw US stocks sink for a fourth straight session.
As the US stock market looked on track for its worst December since the
Great Depression, Trump on Tuesday berated the Federal Reserve for its
stewardship of the economy, a regular recent complaint.
However Tokyo opened higher on Wednesday though the gains were pared
slightly during the morning session. Chinese stocks opened slightly lower,
while Seoul also dropped.
Financial markets in Australia, Hong Kong and New Zealand are closed for a
public holiday.
Markets have been roiled by ongoing uncertainty in the US, with Treasury
Secretary Stephen Mnuchin berated for holding a call with the six biggest US
banks and then reporting on Twitter that the six CEOs have “ample liquidity”
available.
Investors were also unnerved by weekend news reports that Trump had asked
about the possibility of firing Federal Reserve Chairman Jerome Powell,
accounts that Mnuchin said Trump has denied.
– ‘Panic mode’ –
Analysts said investors had been spooked by Trump’s unpredictable
behaviour.
“The markets are in panic mode that the US economy is tanking, expecting
the benefit of Trump’s fiscal stimulus will falter in 2019,” said Stephen
Innes, head of Asia-Pacific trade at OANDA.
“After all, it was the US market that was carrying the weight of global
risk sentiment on its shoulder. If the US economy turns south, global capital
markets are in for a world of hurt.”
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However Norio Miyagawa, senior economist at Mizuho Securities, said that
despite the recent market rout, there has been no clear sign of a recession
in the US.
“Our judgement is that the US economy remains solid at the moment” though
investors need pay attention to the possible impact of US trade rows with
other countries on financial markets and business outlooks, he said in a
note.
The euro was moving narrowly against the dollar on Wednesday.
“The jury is out on this one, US political uncertainty vs weak EU
economy,” said Innes.
“Most days I would favour the weak EU economy, but the swamp and numerous
political sinkholes in Washington are too hard to ignore,” he said in a note.
– Key figures around 0330 GMT –
Tokyo – UP 0.70 percent at 19,290.09
Hong Kong CLOSED
Shanghai composite DOWN 0.06 percent at 2503.25
Euro/dollar: UP at $1.1415 from $1.1414
Dollar/yen: UP at 110.43 from 110.10
Pound/dollar: UP at $1.2706 from $1.2704
Oil – Brent Crude: DOWN 46 cents at $50.35 per barrel
Oil – West Texas Intermediate: UP 22.0 cents $42.75
New York – Dow: CLOSED
London – FTSE 100: CLOSED
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