Home / International/ Asia shares steady on strong US data, holiday-thin trade cap gains

Asia shares steady on strong US data, holiday-thin trade cap gains


Comments / {{hitsCtrl.values.hits}} Views / Friday, 6 October 2017 00:00


 

  • U.S. services sector index at 12-year high
  • hurricanes impact seen disrupting US data both ways
  • Spanish assets under pressure on friction over Catalonia
  • European shares seen steady to slightly weaker

Tokyo (Reuters): Asian shares were steady on Thursday, taking their cue from strong US data though many markets failed to build on early gains in holiday-thinned trade and due to uncertainty about the impact of recent hurricanes on the US economy.

Japan’s Nikkei and Australian shares both ended flat.

MSCI’s broadest index of Asia-Pacific shares outside Japan was almost flat with Hong Kong and South Korea, as well as mainland China, closed for public holidays.

European shares were expected to be steady to slightly weaker, with Germany’s Dax futures down 0.2% while France’s Cac futures and Britain’s FTSE futures were flat.

Wall Street’s three major stock indexes hit fresh highs on Wednesday as did MSCI’s all-country world stock index.

The Institute for Supply Management’s index of non-manufacturing activity rose to 59.8 in September, its highest reading since August 2005, pointing to the resilience of the vast U.S. services sector despite disruption from two powerful hurricanes.

The data came after a surge to 13-year high in the survey of manufacturers as well as car sales at 12-year high, both released earlier this week.

“Shares markets were supported as economic data was generally strong,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

But analysts also cautioned that the data reflected temporary demand stemming from repair and replacement spending in the aftermath of the hurricanes.

Data from private payrolls processor ADP showed monthly hiring slowed to an 11-month low of 135,000, again due partly to disruptions from hurricanes, although this was better than economists’ median forecast.

Economists expect Friday’s nonfarm payrolls report, one of the most closely watched pieces of economic data in financial markets, to show a similar slowdown.

They estimate a payroll increase in September of 90,000, substantially lower than the average over the past year of around 175,000, though some say investors may need to pay attention to state data due on 20 October to exclude the impact from hurricanes.

US bond yields were off their lows as bond prices fell, but yields were held below multi-month peaks hit earlier in the year. The 10-year US bond yield stood at 2.328%, below Monday’s 12-week high of 2.371%.

“Because US economic data for August to October is likely to be disrupted by hurricanes, markets may show a much smaller response to them,” said Tomoaki Shishido, fixed income analyst at Nomura Securities.

“In that regard, the market will be focusing more on policy issues, such as tax cuts and the choice of the next Fed chair,” he added.

US President Donald Trump proposed a tax overhaul late last month but it remains to be seen whether the plan can get through Congress given the divisions among Republicans.

Trump has promised to decide this month on a new chief for the Federal Reserve to replace Janet Yellen, whose term expires in February.

High-rated bonds were affected by worries about Catalonia’s independence vote from Spain.

The yield on Spanish bonds shot up to the highest level since March as prices fell, stretching the gap over German benchmarks to the widest in more than five months after Catalonia’s secessionist leader said the region will declare independence in “days.”

Spain’s IBEX stock index posted its worst single-day loss in 15 months with a 2.85% decline on Wednesday.

Catalonia will move to declare independence from Spain on Monday while Spanish Prime Minister Mariano Rajoy’s government said Catalonia must to “return to the path of law” before any negotiations could take place.

In currency markets, the euro steadied after weakness since late last month and last traded at $1.1761, off Tuesday’s 1-1/2-month low of $1.16955.

The immediate focus is on the minutes of the European Central Bank’s last policy meeting held on 7 September, due to be published at 1130 GMT.

The dollar stood at 112.77 yen, below last week’s high of 113.26, on uncertainties over Japan’s election on 22 October.

Although Prime Minister Shinzo Abe’s ruling coalition is expected to retain a majority, it could lose some seats, possibly weakening Abe’s grip on power.

The Australian dollar dropped 0.5% to 78.20 cents after unexpectedly weak local retail sales data.

Oil slipped after a surprising jump in U.S. crude exports to a record 2 million barrels per day fanned worries about global oversupply.

Brent crude futures hit a two-week low of $ 55.38 per barrel on Wednesday and last stood at $ 55.92. US crude WTI futures also hit two-week low of $ 49.76 per barrel and last traded at $ 49.98.

Elsewhere, Qatar’s stock index sank to a five-year low on Wednesday, hurt by the effects of sanctions imposed by neighbouring states.

 


Share This Article


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

In the desert of Tamil films, actor Sivaji Ganesan was an oasis

Saturday, 22 September 2018

‘Indian Film,’ first published in 1963 and co-authored by former Columbia University Professor Erik Barnouw and his student Dr. Subrahmanyam Krishnaswamy, is considered a seminal study of the evolution and growth of Indian cinema. The book is cit


Imran may turn blind eye to blasphemy law and persecution of Ahmadiyyas

Saturday, 22 September 2018

There are clear signs that Pakistan’s freshly minted Prime Minister, Imran Khan, will make a sincere effort to reduce corruption and maladministration in the domestic sphere. In foreign affairs he is likely to make a brave attempt to mend fences wi


The rate of exchange, capital flight and the Central Bank

Friday, 21 September 2018

The Central Bank (CBSL) exists for the sole purpose of price stability. Its controls on the financial system and monetary policy exist to maintain price stability. As put forth many times by the Governor, the failing of the CBSL to control inflation


Red flag over the Sri Lankan Navy

Friday, 21 September 2018

Shocking story Rusiripala, a former banker in Sri Lanka, who has taken to writing in Daily FT, is perturbed by the red flag I have raised (Daily FT article 18 September) over the shocking charge that our Navy had operated a ransom gang that had abduc


Columnists More