Asian stocks ease on global growth woes, firm yen
MSCI’s broadest index of Asia-Pacific shares outside Japan struggled to keep its head above water after rising more than 3 per cent over the last seven days.
Factory surveys over the past 24 hours highlighted a sluggish global economy, even as the US Federal Reserve appears to be preparing jittery financial markets for a possible interest rate hike in coming months.
The global economy is stuck in a “low growth trap”, the Organisation for Economic Co-operation and Development (OECD) said yesterday, urging governments to boost spending.
“Headline PMIs were broadly disappointing,” Frederic Neumann, co-head of Asian economics at HSBC said in a note.
“New orders point to little upside in the coming months. If anything, for most countries, it suggests an equally soggy summer.”
Japan’s Nikkei fell 2.3 per cent after the dollar sunk to a two-week low against the yen overnight following Japanese Prime Minister Shinzo Abe’s official announcement of a widely expected delay in a sales tax increase next year.
A spate of decent US economic data yesterday failed to lift Asian markets or reveal any fresh clues as to when the US Federal Reserve might opt to raise interest rates, after officials hinted such an increase could come as early as June.
Market turnover has trended lower in recent days as investors stayed on the sidelines awaiting more clues on the future trend of US monetary policy. Friday’s key US nonfarm payrolls report will be watched for the latest clues on the strength of the labour market recovery.
The disappointment over Tokyo’s decision to delay a sales tax increase reverberated in the currency markets with the Japanese yen falling one big figure overnight to 109.480 from an overnight high of 110.830.
“There are three factors behind the dollar/yen tumble. First was the deterioration in risk appetite. The second was that the dollar was vulnerable after having risen too sharply,” said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.
“Lastly, some participants appeared let down that the prime minister did not accompany the tax hike delay announcement with clear stimulus plans.”
The euro edged down 0.3 per cent to 122.15 yen, nursing its losses after dropping to lows of 121.91 overnight, its weakest since May 6.
Against the dollar, the euro edged 0.24 per cent higher at US$1.1208 (RM4.66) ahead of the European Central Bank’s policy meeting later in the session.
The ECB is widely anticipated to hold steady on monetary policy.
Crude oil futures slipped after a choppy session yesterday, as investors awaited this week’s OPEC meeting.
Reuters cited four sources from the Organization of the Petroleum Exporting Countries as saying the industry group was likely to discuss an output ceiling at its meeting in Vienna today.
But later, Iran’s Oil Minister Bijan Zanganeh disagreed.
US crude was down 0.3 per cent at US$48.86 a barrel, but remained above its overnight session low of US$47.75. Brent per cent was flat at US$49.73.
The Thomson Reuters Core Commodity Index rose 0.4 per cent taking its gains to 14 per cent since the start of April. — Reuters
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