Asia markets in red, dollar weakens with Fed hike in question
Asian markets turned lower Friday as investors cashed in at the end of a mostly positive week while the dollar weakened against its main peers with analysts questioning the chances of a third US interest rate hike this year.
Global equities tracked broadly higher over the past five days on easing geopolitical tensions and Wall Street notched up several records, while the greenback soared on a hawkish Federal Reserve meeting.
However, dealers headed in to the weekend a little subdued after New York’s main indexes fell, while a second downgrade of China’s debt rating also added to the negative feeling.
North Korea also lingered in minds after Kim Jong-Un said he will make Donald Trump “pay dearly” for threatening to destroy his country.
While mostly brushed off by investors, the comments revived the stand-off between the US and North Korea earlier in the month after Pyongyang tested a nuclear bomb and ratcheted up tensions in the region.
Hong Kong slipped 0.8 percent and Shanghai was 0.4 percent off, while Singapore shed 0.3 percent and Seoul lost 0.5 percent.
Tokyo finished the morning session 0.3 percent lower.
The dollar slid back after recent gains against the yen, pound and euro. The greenback rallied after the Fed on Wednesday announced a timetable to wind up its huge bond-buying stimulus programme and hinted at a third rate hike this year by December.
However, Greg McKenna, chief market strategist at AxiTrader, said: “Traders don’t exactly agree the Fed will raise rates as much as they say they will.”
He added that there is scepticism that the central bank will be able to lift borrowing costs again this year at the same time as tapering its stimulus, which was put in place during the global financial crisis to keep long-term rates down.
Investors will be keeping an eye on speeches this weekend by top Fed officials hoping they will give some clues about the central bank’s thoughts on interest rates.
Also, eyes will be on Vienna, where oil giants inside and outside OPEC are due to meet and are are expected to discuss an ongoing production cut, with some market-watchers suggesting it could be extended.
Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 0.3 percent at 20,289.36 (break)
Hong Kong – Hang Seng: DOWN 0.8 percent at 27,900.71
Shanghai – Composite: DOWN 0.4 percent at 3,343.43
Euro/dollar: UP at $1.1955 from $1.1942 at 2100 GMT
Dollar/yen: DOWN at 112.00 yen from 112.49 yen
Pound/dollar: UP at $1.3586 from $1.3583
Oil – West Texas Intermediate: UP seven cents at $50.62 per barrel
Oil – Brent North Sea: DOWN one cent at $56.42
New York – DOW: DOWN 0.2 percent at 22,359.23 (close)
London – FTSE 100: DOWN 0.1 percent at 7,263.90 (close)