Asian shares fall; dollar rebounds on US election

Thursday, 6 November 2014 00:01 -     - {{hitsCtrl.values.hits}}

Reuters: The dollar and US stock futures pushed higher on Wednesday after Republicans scored a sweeping victory in US mid-term elections, while Asian shares wilted and oil prices extended losses after more soft economic data from China. Financial spreadbetters expected the equities gloom to lift in early European trade, predicting Britain’s FTSE 100 and France’s CAC 40 would open up as much as 0.7 percent, with Germany’s DAX seen up as much as 0.8 percent Tokyo Stock Exchange (TSE) staff members work at the bourse at TSE in Tokyo - Reuters “We are calling the major bourses firmer with yesterday’s sell-off seemingly overdone,” IG market strategist Stan Shamu wrote in a note. Republicans seized control of the US Senate and also strengthened their grip on the House of Representatives. When the new Congress takes power in January, they will be in charge of both chambers of Congress for the first time since elections in 2006, raising hopes for an end to political gridlock in Washington. S&P E-mini futures rose 0.4 percent, pointing to a stronger open on Wall Street. A weaker yen bolstered exporters shares in Japan, helping the Nikkei stock average erase early losses and end up 0.4 percent at its highest closing level since October 2007. But other Asian stock markets were weighed down by a spate of surveys in recent sessions suggesting that China’s economy continued to lose momentum heading into the fourth quarter. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.5 percent. Service sector growth in China weakened in October as new business cooled, a private survey showed on Wednesday, coming just days after other data revealed sluggish factory growth in the world’s second-largest economy that could prod Beijing to unveil fresh stimulus measures. Dollar rebounds The dollar index was up about 0.2 percent on the day at 87.159, edging back toward its four-year high of 87.406 touched on Monday. The dollar rebounded after an earlier dip as investors locked in profits after this week’s rally, while a Reuters report saying central bankers in the euro zone plan to challenge European Central Bank President Mario Draghi’s leadership style led to short-covering in the euro earlier. Some members intend to raise their concerns with Draghi at the governors’ traditional informal working dinner on Wednesday before the ECB’s formal monthly rate-setting meeting on Thursday, the sources interviewed by Reuters said. “We do not expect further easing at Thursday’s ECB meeting but it may give more insight into its new asset purchase programs,” strategists at Barclays said. The dollar was buying 114.16 yen, up 0.5 percent after touching a fresh seven-year peak of 114.40 yen. The euro edged down about 0.1 percent to $ 1.2537 but remained above a two-year low of $ 1.2439 set on Monday. The European Commission on Tuesday downgraded its forecast for euro zone economic growth over the next few years, leading investors to raise bets the ECB might consider more action to stimulate the region’s economy. On Wall Street on Tuesday, the S&P 500 and Nasdaq Composite ended lower after the big drop in oil prices, while the Dow Jones industrial average eked out a small gain, with energy shares under pressure. US data on Tuesday revealed a surprise widening of the trade deficit last month, which raised speculation that the initially reported 3.5% pace of third-quarter US growth could be revised down. That in turn could reduce the likelihood that the US Federal Reserve would hike interest rates in 2015. The Commerce Department said the trade deficit grew 7.6% to $ 43.03 billion, compared with a forecast of $ 40.00 billion among analysts polled by Reuters. The data increased the safe-haven appeal of US Treasury notes, pushing down the benchmark 10-year yield and weighing on the dollar. The yield stood at 2.344% in Asia, compared to its U.S. close of 2.342% on Tuesday, when it fell as low as 2.303%. Crude prices extended losses after tumbling to multi-year lows on Tuesday on news that top oil exporter Saudi Arabia had cut its US sales prices.

 Oil swoons as oversupply fears extend losses

  Reuters: Oil markets retreated from multi-year lows on Tuesday but still fell more than 2% after Saudi Arabia cut export prices to the United States threatening to deepen a global supply glut that has driven prices down 30% since June. US crude futures settled down $ 1.59 at $ 77.19 after reaching the lowest intraday price since October 2011 in the morning. The price of Brent for next-month delivery settled down $ 1.96 at $ 82.82 after touching its lowest point since October 2010. Refined product stocks jumped last week, surprising those analysts who expected declines, according to data from the American Petroleum Institute released on Tuesday after oil prices settled. Distillate fuels stockpiles rose by 155,000 barrels instead of the 1.8-million-barrel drop predicted in a Reuters poll of analysts. Gasoline stocks rose by 240,000 barrels despite an expected 400,000 barrel increase. US crude stocks fell 639,000 barrels last week to 374.9 million in the wake of the revved-up refinery output.

 Gold, silver slump to fresh four-year lows as sell-off extends

  Reuters: Gold slid for a fifth session in six on Wednesday, tumbling to fresh four-year lows as a strong dollar kept investors away from the safe-haven asset and physical demand failed to provide underlying support. Silver tracked gold lower, hitting its lowest since early 2010, while platinum and palladium also fell. Underscoring the lack of interest in bullion, holdings in SPDR Gold Trust, the top gold-backed exchange traded fund, slumped to a fresh six-year low. Physical buying of jewellery, coins and bars - which usually picks up at lower prices - has not emerged robustly enough to put a floor under prices. “There is very little on the horizon that is bullish. Despite the trillions of dollars of stimulus over the past several years, most central bankers are worried about deflation, not inflation,” said INTL FCStone analyst Edward Meir. “In addition, the roaring US equity markets continue to siphon off assets away from alternative investments, including gold,” he said.