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Monday Sep 23, 2024
Saturday, 21 March 2015 00:00 - - {{hitsCtrl.values.hits}}
Reuters: Asian stocks stalled on Friday as Federal Reserve-inspired gains petered out, while the dollar steadied after rebounding from the shock of a surprisingly dovish US Central Bank.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.1% after rallying 1.3% the previous day. But it still looked set for a gain of around 2.4% for the week.
Spreadbetters called for a slightly higher open for Britain’s FTSE, Germany’s DAX and France’s CAC. US S&P futures also pointed to small gains on Wall Street later in the day.
The region’s decliners included shares in Hong Kong, Malaysia, South Korea and Thailand. Australian and Chinese stocks were among the gainers in a choppy session.
Japan’s Nikkei swerved in and out of the red and was last up 0.1%, taking a breather after a strong rally since February that took it to a 15-year high.
“There are some signs the rally had got overheated. So the market is in a correction phase,” said Masahiro Ayukai, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.
US shares fell overnight as the dollar’s rebound dragged down oil and other commodity prices, sending energy and material sectors lower.
“Crude oil is falling again and if US equities remain unstable amid differing prospects for a Fed rate hike, it will weigh on global equities,” said Junichi Ishikawa, market analyst at IG Securities in Tokyo.
The dollar tumbled across the board, risky assets surged and US debt yields sank after the Fed on Wednesday opened the door further for an interest rate hike but signalled a more cautious outlook for US growth, cooling speculation for tightening in June.
The dollar was little changed at 120.725 yen after sinking to the week’s low of 119.29 after the Fed’s statement.
Helping the greenback was higher US Treasury yields, which on Thursday bounced modestly from multi-week lows hit on the Fed’s dovish-sounding statement. The 10-year Treasury note yielded 1.958% after sinking to a five-week trough of 1.899% overnight.
The euro edged up 0.2% to $1.0684. The common currency had posted its biggest one-day gain in six years against the dollar and climbed a peak of $ 1.1062 after the Fed.
Greece promised on Friday to speed up implementation of its extended bailout agreement and send a full list of detailed reform proposals to its euro zone partners in the coming days, German Chancellor Angela Merkel said.
However, she declined to set any date for releasing any further aid to the Greek government, which is rapidly running out of cash.
The dollar index was down 0.4% at 98.902 but still well above a low of 96.628 plumbed midweek. The index was on track for a 0.1% loss on the week after touching a 12-year high above 100.00 on 13 March.
In commodities, US crude oil was down 0.4% at $ 43.77 a barrel after taking a knock overnight on the dollar’s bounce and Kuwait’s stance that OPEC had no option but to keep producing in an oversupplied market.
US crude has dropped to a six-year low of $ 42.03 a barrel earlier in the week.
Reuters: Gold held recent gains to trade near a two-week high on Friday and was headed for its biggest weekly jump since January, after the Federal Reserve cautioned over its rate hike path and US economic growth.
Spot gold was steady at $ 1,170.60 an ounce by 0319 GMT, near a two-week high of $ 1,177.46 hit on Thursday. The metal is up about 1 percent for the week – its biggest weekly gain since late January.
Gold had dipped to a four-month low earlier this week as concerns mounted over higher US interest rates which could dent demand for non-interest bearing bullion.
The Fed, however, sounded a cautious note on the health of the economic recovery after its two-day policy meet this week, and slashed its median estimate for the federal funds rate and expressed concern over the strength in the dollar.
“Gold (is) still getting traction from dovishly perceived FOMC statement, short covering and fresh purchases,” said HSBC analyst James Steel, referring to the Federal Open Market Committee.
Gold’s rise on Thursday despite a higher dollar and weaker oil prices could indicate underlying strength, he said.
Typically, a stronger dollar dents demand for bullion as a safe-haven and makes it more expensive for holders of other currencies. Weaker oil could also reduce gold’s appeal as a hedge against inflation.
Post-Fed, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, saw its first inflows since 20 February, also boosting sentiment.
In the physical markets, Chinese buying was steady, with premiums on the Shanghai Gold Exchange staying at a robust $ 6-$ 7 an ounce on Friday.
Sustained physical buying could further support prices.
In other industry news, six institutions will start setting gold prices electronically on Friday, as Intercontinental Exchange completes a sweeping change to London’s bullion benchmarks and dispenses with the century-old gold ‘fix’.
Some of the lowest valuations in decades and rising pressure on Africa’s gold producers to restructure or perish are likely to spur a wave of acquisitions in a sector attracting a growing number of potential buyers.
Among other precious metals, silver and platinum were headed for weekly gains after a two-week slide.
Platinum continued to trade at about $ 50 discount to gold, a factor that is likely to stoke physical demand according to the Perth Mint, which is ramping up production of its platinum coins.
Reuters: Brent prices rebounded towards $ 55 a barrel on Friday as the dollar weakened slightly, but gains were limited by supply concerns after Kuwait said OPEC had no choice but to maintain output levels.
High inventory in the United States, the world’s largest oil consumer, also dragged on prices.
Brent crude for May delivery LCOc1 had risen 28 cents to $ 54.71 a barrel by 0415 GMT. The contract is flat for the week, after dropping in the two previous weeks.
US crude for April delivery CLc1 fell 6 cents to $ 43.90 a barrel, headed for its fifth weekly loss. The contract expires on Friday.
“There appears to be a little bit of let up in the US dollar in the Asian trading period, so crude (prices) might be coming off those lows,” said Ben Le Brun, market analyst at OptionsXpress in Sydney.
A weaker dollar typically supports prices for commodities denominated in the greenback, making them cheaper for holders of other currencies.
But oil price gains have been limited by supply concerns, analysts said.
“The US crude inventory numbers have been climbing for the last 10 straight weeks, sitting at their highest levels in 80 years. So that’s a further supply side concern on top of news coming out of Kuwait,” Le Brun said.
“There doesn’t seem to be any sign of OPEC doing anything to turn the taps off so it makes it hard to predict a floor (for oil prices).”
OPEC has no choice but to keep its market share and shun oil output cuts, Kuwait’s oil minister said on Thursday, reiterating the view from the emirate that the group will hold its course when it meets next, in June.
Also weighing on prices, Iraq’s southern oil exports have risen in March as poor weather that delayed cargoes in February cleared, putting OPEC’s second-largest producer back within sight of record shipments.
But fears that inventories could have reached maximum capacity in the United States and a tentative deal to end the largest US refinery strike in 35 years could mean that oil prices will rise, Phillip Futures analysts said in a note.
Six world powers are unlikely to reach a framework agreement with Iran on its nuclear work in the coming days as the sides are still far apart on key issues, a senior European negotiator said on Thursday, blaming Tehran for failing to compromise.
They are seeking a comprehensive agreement to curb Iran’s most sensitive nuclear activities for at least 10 years in exchange for a gradual end to sanctions.
