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Asia markets muted as traders take stock from latest rally
HONG KONG, Jan 22, 2018 (BSS/AFP) – Asian equities mostly fell Monday
after last week’s rallies, while the dollar suffered fresh losses and the
euro was boosted by hopes Chancellor Angela Merkel will be able to form a new
German government.
While a shutdown of the US government looks unlikely to be resolved
immediately, analysts said investors remained upbeat due to the strong global
economic outlook and healthy corporate earnings.
A more cautious tone greeted the new week after Hong Kong hit new all-time
highs and Tokyo’s Nikkei cracked 24,000 for the first time in 26 years.
However, with the earnings season about to go into full swing and data
showing economies across the globe continuing to improve, expectations are
for stock prices to press higher.
In early trade on Monday Hong Kong was down 0.2 percent and Shanghai
slipped 0.1 percent while Sydney eased 0.1 percent. Seoul dived 0.9 percent
and Singapore was off 0.2 percent.
Tokyo ended the morning session 0.2 percent down.
There is little concern over the midnight Friday shutdown of the US
government, which came after lawmakers failed to agree a funding bill with
Democrats in the Senate holding out for Republican concessions on immigration
issues.
The two sides remain locked in talks to resolve the issue but expectations
are for the shutdown to continue for some time, with a planned vote on Sunday
evening delayed until noon Monday.
– German breakthrough –
Still, analysts were not too concerned for the time being.
“Due to the limited economic impact, markets should be largely
unaffected,” Poul Kristensen, portfolio manager at New York Life Investment
Management, told Bloomberg News.
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“If there is a little pullback, we believe it will be a buying
opportunity. The last time the government shut down in 2013, markets moved
higher.”
On currency markets the dollar continues to struggle against its main
peers, with the euro supported by news that Germany’s centre-left Social
Democrats had voted to hold coalition talks with Merkel’s conservatives.
A deal would end months of uncertainty in Europe’s biggest economy.
“By accepting to pursue further discussions and thereby dramatically
improving the chances for another grand coalition, a temporary calm should
engulf the EU political landscape,” said Stephen Innes, head of Asia-Pacific
trading at OANDA.
The pound edged up on hopes Britain will be able to leave the European
Union on better terms than initially expected after French President Emmanuel
Macron said a special post-Brexit trade agreement was possible.
Possible market-moving events this week include meetings at the European
Central Bank and Bank of Japan, which will be closely watched for signs of
further policy tightening, while Donald Trump is due to speak at the Davos
economic forum.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 0.2 percent at 23,772.02 (break)
Hong Kong – Hang Seng: DOWN 0.2 percent at 32,201.88
Shanghai – Composite: DOWN 0.1 percent at 3,486.15
Euro/dollar: UP at $1.2235 from $1.2225 at 2200 GMT on Friday
Pound/dollar: UP at $1.3870 from $1.3860
Dollar/yen: UP at 110.80 yen from 110.77 yen
Oil – West Texas Intermediate: UP 16 cents at $63.53 per barrel
Oil – Brent North Sea: UP nine cents at $68.70 per barrel
New York – DOW: UP 0.2 percent at 26,071.72 (close)
London – FTSE 100: UP 0.4 percent at 7,730.79 (close)
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