GLOBAL MARKETS-Asian shares, dollar struggle on Ukraine anxiety

26-Apr-2014 Intellasia | Reuters | 6:00 AM Print This Post

Asian stocks struggled on Friday as fears of an escalating Ukraine crisis eclipsed upbeat US economic data and robust US tech shares.

US Secretary of State John Kerry said on Thursday that time was running out for Moscow to change its course in Ukraine.

Ukrainian forces killed up to five pro-Russia separatists on Thursday and Russia conducted army drills near the border, raising fears its troops would invade.

“The escalation of tension in Ukraine is likely to keep markets risk-off,” said Kyosuke Suzuki, director of forex at Societe generale in Tokyo.

MSCI’s broadest index of Asia-Pacific shares outside Japan erased early modest gains and fell 0.8 percent, on track for a 1 percent weekly loss but still up nearly 3 percent for the year.

Hong Kong’s Hang Seng Index shed 1.3 percent and touched a four-week low on concerns about the state of China’s economy and the health of the banking sector.

“People aren’t very keen on any of the Chinese banks at the moment, because the banks reflect the overall concerns about the economy,” said Larry Jiang, chief strategist at Guotai Junan International in Hong Kong.

Japan’s Nikkei stock average wavered in an out of positive territory in extremely choppy trade, after opening solidly lower amid disappointment over a failed attempt to reach a US-Japan trade pact. It was last down 0.2 percent, on track for a 1 percent weekly loss.

The two countries made progress in trade talks at a bilateral summit in Tokyo but did not reach the Trans-Pacific Partnership (TPP) trade deal that they were hoping to seal, Economy minister Akira Amari said on Friday.

“The initial reaction to the TPP was negative, but then people started looking into companies’ results,” said Kyoya Okazawa, head of global equities at BNP Paribas in Tokyo, explaining the Nikkei’s about-face.

“I think this is shortcovering, and now people will focus on individual stocks throughout earnings season rather than the macro picture,” Okazawa said.

Core consumer prices in Tokyo, a leading indicator of nationwide inflation, rose 2.7 percent in April from a year earlier, a hair shy of forecasts. It was the fastest gain since 1992 as a national sales tax increase drove up prices, though adjusted for the tax hike, the rise was just 1 percent.

On Wall Street, stocks managed to shrug off the rising Ukraine tensions after tech bellwethers Facebook and Apple posted upbeat results on Wednesday and US economic data suggested that growth picked up pace in the second quarter.

US durable goods orders rose more than expected in March and a measure of business capital spending plans surged.

While brighter US stocks and upbeat data supported the greenback, it still fell against a basket of major currencies, with the dollar index edging down to 79.764.

But the US unit took back some lost ground against the yen, losing a few ticks to 102.31 yen but still above a session low of 102.19 yen. The euro was flat against its Japanese counterpart at 141.51 yen.

Against the dollar, the euro was steady on the day at $1.3831, despite comments from European Central Bank President Mario Draghi repeating recent concerns about euro strength and the ECB’s willingness to launch a “broad-based asset purchase programme” if low inflation become entrenched.

China’s yuan opened at 6.2510 per dollar on Friday, marking a new 16-month low.

In the commodities front, spot gold XAU= was down about 0.1 percent at $1,291.80 an ounce after touching its lowest levels since February on Thursday, though fears about the Ukraine crisis provided some support.

Copper touched a session high of $6,775 a tonne, as demand from China helped lift it to its strongest since March 7, and was last up about 0.1 percent at $6,756.25

Brent crude was nearly flat at $110.41 a barrel, holding close to seven-week highs after surging $1.22 a barrel on Thursday amid the Ukraine unrest.


Category: FinanceAsia

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