Asian stock markets end week on low but Tokyo up on weak yen
Hong Kong: Most Asian markets headed into the weekend on a dour note following a Wall Street sell-off on Friday, but Japanese stocks were again boosted by a weaker yen as another feeble inflation reading put fresh pressure on Tokyo.
The dollar extended gains in Tokyo after breaking 105 yen on Thursday on increasing expectations the Federal Reserve will lift interest rates by year’s end, helping Japan’s exporters.
Rate hike talk comes as analysts suggest years of cheap borrowing are nearing an end, a point reinforced by a surprise jump in British economic growth that shattered any chance of another Bank of England cut.
That has in turn put upward pressure on bond yields from the US to Australia as traders shift out of the ultra safe investments to seek better returns. Bond yields go up as prices go down.
“We are seeing a shift, with global central banks unlikely to provide additional stimulus and that’s driving bond yields higher and is strengthening the US dollar,” Niv Dagan, Melbourne-based Executive Director at Peak Asset Management LLC, told Bloomberg News.
The dollar’s gains were cemented on Friday by news that Japanese consumer prices fell for a seventh straight month, which Michinori Naruse, an analyst at Japan Research Institute, said meant “the Bank of Japan has no choice but to delay the deadline of the (two per cent inflation) target”.
While the greenback dipped slightly against the pound and euro, it kicked on against most other higher-yielding Asia-Pacific currencies with the South Korean won 0.2 per cent lower, Australia’s dollar 0.6 per cent off and the Malaysian ringgit down 0.3 per cent. The weaker yen lifted the Nikkei, which ended 0.6 per cent higher. But Shanghai closed down 0.3 per cent while Hong Kong lost 0.8 per cent.
Sydney fell 0.3 per cent, Seoul shed 0.2 per cent and Singapore was 0.5 per cent lower. Manila retreated 1.6 per cent while there were also losses in Jakarta and Bangkok.
In early European trade, London and Paris each fell 0.4 per cent while Frankfurt shed 0.8 per cent.
Oil prices dipped after Thursday’s bounce with worries over Iraq and Russia’s comments about being exempt from a planned output cut feeding anxiety.
“Oil managed a tepid bounce in New York trading as Saudi rhetoric about cutting Opec production by four per cent put a temporary floor under WTI and Brent,” Jeffrey Halley, senior market analyst at OANDA, said in a note. But he added that “the onus will fall on Saudi Arabia to pull any deal together”. — AFP