GLOBAL MARKETS-Asian stocks skid, yen stands tall as Ukraine crisis darkens mood

15-Mar-2014 Intellasia | Reuters | 6:00 AM Print This Post

Asian shares skidded to a three-week low and the yen held steady at lofty levels on Friday, as heightened tension in Ukraine ahead of a weekend referendum prompted investors to shed riskier assets.

Solid US retail sales and employment data also reinforced expectations that the US Federal Reserve will stick to its plan of gradually withdrawing its asset-buying stimulus, while Thursday’s disappointing Chinese economic data added to the gloom.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5 percent in early trading, touching its lowest level since late February and on track for a weekly loss of more than 2 percent.

Australian shares gave up 1.4 percent in early trade.

Russia launched new military exercises near its border with Ukraine on Thursday, even as the US cautioned that Moscow risked facing serious steps if annexation was the outcome of a referendum planned for Sunday in the Crimea.

The latest developments in the Ukraine crisis sent the perennial safe-haven yen soaring against both the dollar and the euro.

The greenback was down about 0.1 percent on Friday at 101.72 yen, wallowing close to a more than one-week trough of 101.54 yen hit on Thursday, when it tumbled more than a yen from a session high of 102.86 yen.

The common currency slipped about 0.2 percent on the day to 140.98 yen, after a precipitous fall on Thursday from a session high of 143.38 yen to a low of 140.70 yen.

US data reinforced perceptions that the central bank will stick to its stimulus withdrawal. Retail sales rose 0.3 percent last month, ending two straight months of declines, while separate data from the Labour Department showed initial claims for state unemployment benefits dropped to their lowest level since late November.

“Incoming data in the US suggest the economy is emerging from weather-related distortions to activity,” strategists at Barclays wrote in a note to clients.

“We continue to expect the Fed to taper its monthly pace of asset purchases by another $10 billion at its meeting next week,” they said.

On Wall Street on Thursday, benchmark US stock indices fell more than 1.0 percent, posting their biggest daily losses since early February, with the S&P500 stock index tumbling 1.17 percent.

The yield on the benchmark 10-year US Treasury note fell to 2.641 percent in early Asian trading from its US close of 2.653 percent.

Data on Thursday showed China’s industrial output growth fell short of forecasts for the combined Jan/February period, and retail sales also came in weaker than expected. The disappointing figures fuelled fears of a slowdown in the world’s second biggest economy.

That continued to weigh on the Australian dollar, considered a proxy for China plays. The Aussie lost about 0.1 percent to $0.9019.

The euro also remained under pressure after comments from European Central Bank President Mario Draghi, who said the bank has been preparing additional policy steps to guard against deflation taking hold in the euro zone.

The single currency was down about 0.1 percent at $1.3859, moving away from Thursday’s 2-1/2 year high of $1.3967 hit before Draghi spoke.


Category: FinanceAsia

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