Asian shares dip as commodities ease, bitcoin tumbles

Reuters Tokyo | Updated on January 18, 2018 Published on January 17, 2018

Bitcoin stood at $11,362, after a fall of 16.3 per cent on Tuesday, its biggest daily decline in four months. File Photo   -  Reuters

Bitcoin hits 6-week low after 16 per cent fall previous day

Asian stocks stepped back from a record high on Wednesday as the region's resource shares were dented by falling oil and commodity prices while digital currencies tumbled on worries about tighter regulations. MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.1 per cent from its record high as resource shares declined after oil and other commodities succumbed to profit-taking after recent gains. Japan's Nikkei fell 0.7 per cent from its 26-year peak hit the previous day.

Wall Street paused its rally, led by a 1.2 per cent fall in energy stocks as well as weakness in General Electric . The US conglomerate raised the prospect of breaking itself up and announced more than $11 billion in charges from its long-term care insurance portfolio and new US tax laws. Cboe volatility index, which measures investors' expectation on price swings in US shares, rose to a one-month closing high of 11.66 from near record low levels seen earlier this month.

World shares have rallied since the start of this year on prospects of strong global growth and improving earnings in the US and elsewhere. Indeed, MSCI's broadest gauge of the world's stock markets rose 0.3 per cent to another rocord high on Tuesday, extending its gain so far this month to 4.2 per cent.

“US corporate earnings are beating estimates more than usual. People have been talking about 'goldilocks economy'," said Soichiro Monji, chief strategist at Daiwa SB Investments, adding market fundamentals remain solid. “Now they are starting to think a 'red-hot' economy may be a better description.”

In the currency market the dollar was broadly weak, sticking near a three year low against a basket of currencies. “As more countries in the world are starting to unwind their stimulus, the dollar's yield advantage will shrink and prompt a correction in the dollar's strength since 2014,” said Minori Uchida, chief FX analyst at Bank of Tokyo Mitsubishi-UFJ.

Three sources close to the European Central Bank's policy told Reuters that the ECB is unlikely to ditch a pledge to keep buying bonds at next week's meeting as rate setters need more time to assess the outlook for the economy and the euro.

Although the report briefly pushed down the euro, the currency stayed near a three-year high as investors expect the ECB's eventual exit from stimulus as a major market theme for this year. The euro last traded at $1.2261, near Monday's high of $1.22965, which was its highest since December 2014. The ECB last week signalled a growing appetite for revising its policy message in “early” 2018, and specifically a promise to continue its 2.55 trillion euro money-printing programme until inflation heads back to target. The dollar fetched 110.46 yen, having fallen for the sixth straight session to a four-month low of 110.245 yen on Tuesday.

Gold traded at $1,340.6 per ounce, near Monday's four-month peak of $1,344.7.

On the other hand, digital currencies tumbled, with bitcoin falling to a six-week low of $10,162 after reports said South Korea and China could ban trading, which intensified fears of a wider regulatory crackdown. Bitcoin stood at $11,362, after a fall of 16.3 per cent on Tuesday, its biggest daily decline in four months.

Oil prices pulled back from three-year highs as traders booked profits but healthy demand underpinned prices near $70 per barrel, a level not seen since the market slump in 2014. Prices have been driven up by oil production curbs in OPEC nations and Russia, and demand amid healthy economic growth. US crude futures traded at $63.88 per barrel after hitting a December 2014 peak of $64.89 on Tuesday.

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Published on January 17, 2018
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