Asian shares slide as investors ponder stimulus outlook

Reuters: Asian shares snapped a five-day winning streak on Tuesday as investors took stock of a rally driven by hopes that central banks will provide more stimulus to offset a likely downturn triggered by Brexit.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7%, but was still within reach of its 9 June peak, having risen 5.6% from its low after the Brexit vote on 23 June.

Japan’s Nikkei dropped 0.9%.

Chinese shares rose, with the CSI 300 up 0.3%, while the Shanghai Composite added 0.6%, buoyed in part by a private business survey which showed growth in the services sector jumped to an 11-month high. But Hong Kong’s Hang Seng retreated 0.8%.

But trade was thin, with financial and commodities markets in the United States closed on Monday for Independence Day.

In Europe, the FTSEurofirst 300 index fell 0.6%, snapping its four-day winning streak, led by a 1.6% decline in bank shares.

Shares in Italian banks, saddled with a mountain of bad loans, dropped 3.7% after Italian Prime Minister Matteo Renzi’s spokesman said the country had no plans to pump public money into its banks, a move that could be seen as defying EU rules.

Oil prices retreated as analysts predicted demand will weaken amid concerns about the global economic outlook.

Brent crude slipped 0.7% to $49.74 a barrel, after gaining 6.2% over the week through Monday.

US crude slipped 1.2% to $48.41, eating into the 5.7% advance made over the prior week.

Overnight the price of precious and base metals hit multi-month highs before giving up gains as traders bet on more stimulus.

Silver relinquished some of its gains from the past few sessions that had sent it to a two-year high of $21.107 an ounce on Monday. The metal, which rose 14.6% over the week ended Monday, fell 1.8% to $19.93.

Gold also closed at a two-year high of $1,357.40 per ounce on Monday and last stood at $1,344.56.

The price of copper and aluminum hit two-month highs on Monday while lead hit a four-month peak.

“Various commodities are rising even though there is no clear sign of sudden improvement in demand in each market,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management. “Their rally seems to be driven by hopes of stimulus.”

Britain’s vote to leave the European Union has ramped up the urgency for some Asian central banks to ease monetary policy, as a prolonged period of uncertainty threatens a wider downshift in trade and investment.

Many investors expect the European Central Bank and the Bank of Japan to expand their monetary easing. Base metal prices were also bolstered by talk of stimulus in China.

The euro slid 0.2% to $1.11305, but retained most of the gains made since its 3 1/2-month low of $1.0912 hit in the wake of the UK referendum.

The Bank of England has indicated it could provide stimulus measures to support the economy in coming months.

That kept the pound close to its 31-year trough hit in the wake of the Brexit decision.

Sterling dropped 0.3% to $1.3253, just 1% above its 27 June low of $1.3122.

The yen strengthened 0.4% to 102.16 to the dollar.

The Australian dollar pulled back 0.3% to $0.7515. On Monday, it shrugged off political uncertainty caused by Australia’s undecided general election to rise to $0.7545, its highest level since 24 June, helped by the advance in commodities.

Gold holds near 2-year highs on easing dollar, weaker equities

Reuters: Gold prices held steady early on Tuesday on an easing dollar and weaker Asian stocks, after the metal surged to near two-year highs the session before.

Spot gold was up 0.1% at $1,351.49 an ounce by 0052 GMT. The precious metal touched a peak of $1,357.60 an ounce Monday, less than $1 below last month’s high.

US gold was up over 1% at $1,354.30.

Silver rose as much as 7% and breaking above $21 an ounce for the first time in two years on Monday. The white metal was up 0.4 at $20.40.

Asian shares stepped back after five straight days of gains on Tuesday as investors took stock of a rally driven by the hope that central banks will provide stimulus to offset a likely downturn triggered by Brexit.

The US dollar index, which tracks the greenback against a basket of six rival currencies, edged down 0.1% to 95.581.