Asian shares bounce after losses

Updated - January 09, 2018 at 06:23 PM.

MSCI Asia-Pacific index up 0.4 per cent after 3 days of losses

The three major US stocks indexes snapped three days of losses and ended higher on Friday

Asian stocks bounced on Monday after three losing sessions, tracking a firmer Wall Street, while the dollar was weighed down by weak US inflation data which dampened prospects of another Federal Reserve interest rate hike later this year.

Investors awaited a batch of Chinese data due later in the session (0200 GMT), including industrial output and retail sales. The readings are expected to show continued solid growth but markets are edgy after softer-than-expected trade data last week.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.4 per cent. The index had fallen for three straight days prior on escalating tensions between the United States and North Korea. Australian stocks rose 0.2 per cent and South Korea's KOSPI climbed 0.7 per cent. Japan's Nikkei bucked the trend and fell 1.2 per cent as a stronger yen overshadowed much better-than-expected second quarter economic growth.

The three major US stocks indexes snapped three days of losses and ended higher on Friday, as investors bet on slower US rate hikes following weaker-than-expected consumer price data. But gains were muted by increasingly aggressive exchanges between Washington and Pyongyang.

Geopolitical risks were expected to remain a key theme for the global markets in the near term, as North Korea celebrates Liberation Day on Tuesday to mark the end of Japanese rule.

Investors also braced for tensions ahead of Aug. 21, when an annual joint US-South Korean military exercise is due to begin. “Due to caution towards a further escalation in tensions over North Korea, US yields and equities are expected to decline and the yen is likely keep appreciating this week,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

US Treasury yields, which already declined on the North Korean concerns, fell further on Friday on the soft US consumer prices data. The benchmark 10-year Treasury yield touched 2.182 per cent on Friday, its lowest since late June.

Friday's data showed the US consumer price index edged up just 0.1 per cent last month after it was unchanged in June. Economists polled by Reuters had forecast the CPI rising 0.2 per cent in July.

The dollar index against a basket of six major currencies was steady at 93.085 after it slipped about 0.4 per cent on Friday. The greenback traded at 109.160 yen after slipping to 108.720 on Friday, its weakest since April 20.

The yen tends to gain in times of geopolitical tension on expectations that Japanese investors will repatriate assets. It also showed little reaction to second-quarter gross domestic product data which revealed that the economy expanded for a sixth straight quarter led by private consumption and capital expenditure. While growth was faster than expected, it is not expected to nudge the Bank of Japan into dismantling its massive stimulus programme any time soon, as inflation remains stubbornly weak.

The euro was 0.1 per cent higher at $1.1824.

Crude oil prices were little changed after rising slightly on Friday on lower US crude stocks, instability in major producer Nigeria and strong global demand growth. US crude was up 1 cent at $48.83 a barrel and Brent was a cent lower at $52.09 a barrel.

Gold hovered near a two-month high, benefiting from the US-North Korean tensions and Friday's weak US inflation data. The dollar's recent weakness was also seen to be helping gold. Spot gold was at $1,288.75 an ounce after reaching $1,291.86 on Friday, its highest level since June 7. Other precious metals like silver and platinum were also buoyant.

Published on August 14, 2017 03:06