Asia down as oil fall hits sentiment, dollar gets respite

Friday, 12 December 2014 05:43 - - {{hitsCtrl.values.hits}}

Reuters: Asian stocks fell on Thursday as falling oil prices added to global growth concerns, while the dollar saw a bit of a respite against the yen and euro after successive sharp losses. Spreadbetters expected the bearish tone for equities to continue into Europe, forecasting Britain’s FTSE to fall by as much as 0.3% at the open, and Germany’s DAX and France’s CAX to start 0.4% lower. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.7% as another large decline in oil prices took a heavy toll on energy shares and hit Wall Street hard overnight. The volatile Shanghai Composite Index shed earlier gains and fell 0.8% after regulators announced a flood of IPO approvals, which could signal authorities are growing increasingly concerned over the China markets’ massive rally in the last two weeks. Tokyo’s Nikkei lost 1%, pulling further back from 7-1/2 year highs hit at the week’s start, with sentiment bruised by the rout in U.S. stocks. Crude oil prices fell as much as 5% overnight after data underscored weak U.S. demand and Saudi Arabia reiterated that it has no plans to curb output. Brent crude ticked up 0.8% to $64.73 a barrel but stayed within reach of a five-year low hit in the previous session, with the market’s bearish tone largely intact. The dollar edged up 0.3% to 118.165 yen, getting some respite after retreating to as low as 117.445 from a seven-year high of 121.86 reached on Monday.

The S&P 500, at a record high just last Friday, fell to its lowest since early November on Wednesday. “Recent nervousness in equity market sentiment is consistent with our view that equity fund positioning is near peak levels, which points to a near-term pullback,” strategists at Barclays said in a note to clients. “With underperformance by active managers, we worry that redemptions will continue and force an unwind of currently extended positioning,” they said. In addition to declining oil, concerns over the political situation in Greece have also dented appetite for risk assets. The euro was steady at $1.2449 after rising to $1.2496. The common currency had rallied back from 2-1/2 year trough of $1.2247 hit on Monday before losing steam. Despite the recent volatility displayed by the dollar, the divergence in U.S. monetary policy from Europe and Japan could continue to favour the greenback in the long term. New Zealand’s Central Bank Governor said he expected to see the most quantitative easing since 2011 around the world next year, particularly as economic risks in Japan and Europe remain. “There are question marks around Japan and certainly in Europe,” Reserve Bank of New Zealand Governor Graeme Wheeler told a media briefing. The RBNZ on Thursday held its benchmark rate at a near six-year high and signalled further modest rate rises over time. That propelled the New Zealand dollar to a nine-day high of $0.7872 and away from a 2-1/2 year low of $0.7609 plumbed Tuesday. The Australian dollar rose 0.1% to $0.8325 after data revealed Australian employment in November showed a much higher than expected rise. The Aussie, another recent beneficiary of the retreating greenback, had fallen to a 4-1/2 year low of $0.8223 on Tuesday. Safe-haven government debt remained better-bid. The benchmark 10-year Japanese government bond yield touched 0.390%, its lowest since April 2013.