Asian stocks to end 2016 on buoyant note

Asian stocks looked set to end 2016 on an upbeat note, while profit-taking weighed on the dollar and the euro held near a two-week high after spiking early in the day.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 per cent on Friday, diverging from Wall Street, which posted slight declines overnight.

Europe’s STOXX 600 index also closed lower as appetite for risk remained subdued ahead of the new year. British stocks posted gains of 0.2 per cent.

In a year marked by major political surprises, including Brexit in June and the unexpected election of political novice Donald Trump as US President in November, Asia Pacificex-Japan stocks are poised to record a 3.8 per cent gain.

Despite the modest figure -- the Dow Jones Industrial Average, in contrast, is up a whopping 14 per cent -- that is theAsia-Pacific index’s best performance in four years and follows two years of losses.

Thailand, with an almost 20 per cent gain, is set to be the region’s best-performing major market, followed by Indonesia,which has surged almost 16 per cent. China looks to be the laggard with a loss of about 12 per cent. Malaysia, down 3.4 per cent, and the Philippines, down 1.6 per cent, were the only other markets poised to post losses for the year.

Japan’s Nikkei retreated 0.4 per cent on Friday, erasing most of the year’s meagre gains and set to end the year flat. That is its worst performance in five years, with the index slammed by the safe-haven yen’s 22 per cent surge from the start of 2016 to its peak after the Brexit vote.

The Japanese currency has fallen almost 15 per cent since that peak -- with most of the losses since November driven by a surge in the dollar, reflecting exuberance over Trump’s anticipated stimulatory policies -- but is still set for a 3.5 per cent gain versus the dollar this year.

“2016 has been a year of changes and these changes had hardly been slight,” Jingyi Pan, market strategist at IG in Singapore, wrote in a note.

“A preference for safe haven assets to tide through the year end have set in, with gold and yen taking off.”

The greenback, which has soared 10.5 per cent against the yen since before the election results were announced, was last down 0.2 per cent at 116.44 yen, extending a 0.5 per cent slump seen overnight.

The dollar index, which tracks the greenback against a basket of six major global peers, dropped 0.35 per cent to102.28 on Friday, following a 0.6 per cent slide on Thursday. It is poised to end 2016 3.7 per cent higher.

The euro jumped as much as 2 per cent early on Friday, its biggest intraday gain since November 8, before settling back down to trade 0.6 per cent higher at $1.0527.

“It's a really thin market today, and suddenly, offers disappeared and short-term players pushed the euro higher and took out stops. That’s all,” said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.

The common currency is still down 3 per cent for the year.

The Chinese yuan is on track to end the year weaker. The dollar has strengthened 7.1 per cent versus the Chine securrency, even though China has been selling the dollar to defend the yuan, sending its stock of US government debt to the lowest in more than six years in October.

US bond yields, which had been climbing since the US election on expectations of higher interest rates, have reversed course over the past two weeks as investors have sought shelter from risk. They were at 2.4659 per cent on Friday, slightly above a two-week low touched overnight.

Gold held near a two-week high, basking in its safe haven status amid the broad pull-back in risk.

Spot gold edged up 0.1 per cent to $1,159.31 an ounce,adding to its 1.5 per cent surge on Thursday. It is headed for a 9.3 per cent jump this year, snapping a three-year losing streak.

Oil prices inched up after sliding on Thursday in their first day of losses this week, after a rise in US inventories caught markets off guard.

US crude added 0.2 per cent to $53.84 a barrel on Friday, after falling 0.5 per cent on Thursday. It is on track for a 46 per cent surge this year, recovering all of its 2015 losses.

Brent crude jumped 1.2 per cent to $56.83, despite a paltry 0.1 per cent loss on Thursday. It is headed for an eye-watering 51 per cent gain this year, almost back to where it was at the start of 2015.

COMMENT NOW