Dollar ticks up, Asian shares slip as risk shunned
Wednesday, 25 November 2009
HONG KONG, Nov 24 (Reuters): The dollar recouped some of its overnight losses Tuesday, while Asian shares slipped as investors shrugged off upbeat US home sale data and took light profits on recent rallies.
Financial bookmakers expected shares in Europe to open lower while US equity futures were down 0.2 per cent.
The dollar recovered ground as investors in Asia grew more cautious ahead of a string of US economic data this week and the start of the Christmas shopping season Friday after the US Thanksgiving holiday, which will be a key test of consumer confidence.
The dollar gained 0.3 per cent against a basket of major currencies after falling in New York where the market took comments by a senior US Federal Reserve official Sunday as further evidence the central bank would maintain its very low interest rate policy for some time.
Trading at 75.272, the dollar index was above a 15-month low at 74.679 reached last week.
Dealers in Tokyo said some investors were closing dollar short-positions ahead of the Thanksgiving holiday.
Asian shares slid, despite a solid performance on Wall Street after data showed existing home sales reached their highest level in two-and-a-half years, as profit taking set in.
The Shanghai market was worst hit with the dollar-denominated B-share index plunging more than 8 per cent by mid-afternoon as investors gave up on hopes for government measures to support the market.
Such speculation, including one that China might merge B shares with an international board being set up for foreign firms to list in Shanghai, had sparked a near 20 per cent market rally earlier this month.
The MSCI index of Asia Pacific stocks traded outside Japan fell 0.6 per cent but it has already rallied 66 per cent this year, leading some investors to question whether data is strong enough to justify further gains at this stage.
"I think everyone has been waiting for a downturn for so long and it hasn't come. There's a bit of nervousness out there, you've got gold at record levels," said Martin Angel, a dealer at Patersons Securities in Australia, where shares slid 0.7 per cent.
Revised third-quarter US GDP data and a US consumer confidence report later Tuesday will give more clues on the strength of the world's largest economy.
Sales at US retailers Friday after the holiday could yield vital clues to the recovery power of American consumers, whose spending accounts for more than two-thirds of the economy. They could also signal whether Asian exporters can expect a rush of late orders before Christmas.
Shares in Japan fell 1 percent as a firm yen hit exporters shares and investors worried about the economy.
Japanese stocks show a striking divergence with their Asian peers. While the MSCI Asia Pacific ex-Japan is only just below a 14-month high and sitting on gains of nearly 70 per cent this year, the MSCI Japan languishes at a seven-month low and is negative for the year.
Policy uncertainty is helping depress sentiment. Japanese Finance Minister Hirohisa Fujii said Tuesday that demand was weak and fiscal policy alone could not revive it, putting pressure on the Bank of Japan to respond to deflation and fanning a policy dispute between the government and the central bank.
"The Bank of Japan is asleep at the wheel as usual," banking minister Shizuka Kamei told reporters.
Japan Airlines was one of the biggest losers, tumbling 8.4 per cent, hitting a record low at one point, on fears the struggling carrier could face bankruptcy.
Financial bookmakers expected shares in Europe to open lower while US equity futures were down 0.2 per cent.
The dollar recovered ground as investors in Asia grew more cautious ahead of a string of US economic data this week and the start of the Christmas shopping season Friday after the US Thanksgiving holiday, which will be a key test of consumer confidence.
The dollar gained 0.3 per cent against a basket of major currencies after falling in New York where the market took comments by a senior US Federal Reserve official Sunday as further evidence the central bank would maintain its very low interest rate policy for some time.
Trading at 75.272, the dollar index was above a 15-month low at 74.679 reached last week.
Dealers in Tokyo said some investors were closing dollar short-positions ahead of the Thanksgiving holiday.
Asian shares slid, despite a solid performance on Wall Street after data showed existing home sales reached their highest level in two-and-a-half years, as profit taking set in.
The Shanghai market was worst hit with the dollar-denominated B-share index plunging more than 8 per cent by mid-afternoon as investors gave up on hopes for government measures to support the market.
Such speculation, including one that China might merge B shares with an international board being set up for foreign firms to list in Shanghai, had sparked a near 20 per cent market rally earlier this month.
The MSCI index of Asia Pacific stocks traded outside Japan fell 0.6 per cent but it has already rallied 66 per cent this year, leading some investors to question whether data is strong enough to justify further gains at this stage.
"I think everyone has been waiting for a downturn for so long and it hasn't come. There's a bit of nervousness out there, you've got gold at record levels," said Martin Angel, a dealer at Patersons Securities in Australia, where shares slid 0.7 per cent.
Revised third-quarter US GDP data and a US consumer confidence report later Tuesday will give more clues on the strength of the world's largest economy.
Sales at US retailers Friday after the holiday could yield vital clues to the recovery power of American consumers, whose spending accounts for more than two-thirds of the economy. They could also signal whether Asian exporters can expect a rush of late orders before Christmas.
Shares in Japan fell 1 percent as a firm yen hit exporters shares and investors worried about the economy.
Japanese stocks show a striking divergence with their Asian peers. While the MSCI Asia Pacific ex-Japan is only just below a 14-month high and sitting on gains of nearly 70 per cent this year, the MSCI Japan languishes at a seven-month low and is negative for the year.
Policy uncertainty is helping depress sentiment. Japanese Finance Minister Hirohisa Fujii said Tuesday that demand was weak and fiscal policy alone could not revive it, putting pressure on the Bank of Japan to respond to deflation and fanning a policy dispute between the government and the central bank.
"The Bank of Japan is asleep at the wheel as usual," banking minister Shizuka Kamei told reporters.
Japan Airlines was one of the biggest losers, tumbling 8.4 per cent, hitting a record low at one point, on fears the struggling carrier could face bankruptcy.