Asia markets take fresh hit Europe crises brew

09-Feb-2017 Intellasia | AFP | 6:00 AM Print This Post

Asian markets broadly fell Wednesday with confidence hit by worries over Donald Trump, while the euro struggled on uncertainty about France’s political outlook and another crisis brewing in Greece.

Wall Street continues to touch record highs on hopes Trump will enact business-friendly measures but Asian dealers are less sanguine following a series of outbursts that have included warnings of protectionism and labelling Japan and China trade cheats.

Against that background, traders are now growing increasingly concerned about rising populism across the world – particularly following Trump and Brexit – with far-right presidential candidate Marine Le Pen echoing many of the tycoon’s themes.

There are also elections in Germany, Italy and the Netherlands this year, with similar issues in those countries fuelling worries the EU could break up.

Against this backdrop the euro sank Tuesday to $1.0656, from highs above $1.08 at the start of the week, and remained under pressure in Asia.

“While it is premature to draw any definitive conclusion, the political landscape in both France and Italy are coming under immense scrutiny from investors, which should keep euro upticks limited,” said Stephen Innes, senior trader at OANDA.

“If we factor in a possibly divisive German election, risks are rising immensely on the European political stage.”

Greece’s debt saga also reared its head after the International Monetary Fund warned the country would likely not reach targets laid out for it to qualify for bailout cash.

– ‘Flash point’ -

While Athens dismissed the report, the comments sent the cost of borrowing for Greece soaring on bond markets and raised the spectre of another crisis for the EU to juggle.

In Asian trade Tokyo gave up early gains to end the morning 0.2 percent lower as the yen strengthens against the dollar.

Hong Kong slipped 0.6 percent and Shanghai sank 0.5 percent, with selling boosted by news China’s foreign exchange reserves fell below $3 trillion in January for the first time in six years as it battled to support the yuan in the face of huge capital outflows.

Analysts said that while the breach was not a big issue, the downward trend was a worry.

“In the current context of President Trump threatening to declare China a currency manipulator, and his clear desire for a weaker US dollar, China’s reserves management and how that interplays with the (dollar-yuan) rate could be another flashpoint between the world’s two biggest economies,” Greg McKenna, chief market strategist at FX and CFD provider AxiTrader, added.

Seoul shed one percent, Singapore gave back 0.5 percent and Taipei, Manila and Jakarta also turned lower. However, Sydney edged up 0.2 percent.

Oil prices extended losses after a reading showing US stockpiles soared last week, leading to worries a government report later Wednesday will also point to an increase.

Both main contracts fell around one percent Wednesday, a day after losing a little more than that.

– Key figures near 0230 GMT -

Tokyo – Nikkei 225: DOWN 0.2 percent at 18,875.57 (break)

Hong Kong – Hang Seng: DOWN 0.6 percent at 23,200.46

Shanghai – Composite: DOWN 0.5 percent at 3,136.54

euro/dollar: DOWN at $1.0680 from $1.0684

Pound/dollar: DOWN at $1.2490 from $1.2507

Dollar/yen: DOWN at 112.00 yen from 112.37 yen

Oil – West Texas Intermediate: DOWN 66 cents at $51.51 per barrel

Oil – Brent North Sea: DOWN 50 cents at $54.55

New York – Dow: UP 0.2 percent at 20,090.29 (close)

London – FTSE 100: UP 0.2 percent at 7,186.22 (close)


Category: FinanceAsia

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