Asian shares fall to two-week low; yen strengthens
Wednesday, 7 August 2013 00:00
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Reuters: The dollar extended losses against the yen into a third day on Tuesday as markets questioned their expectations the US Federal Reserve would start scaling back its stimulus as soon as next month, putting Japanese shares on the defensive.
Asian shares outside of Japan hit a two-week low and headed for their first loss in four days, as disappointing first-half earnings from HSBC dragged Hong Kong’s Hang Seng Index sharply lower.
The Australian dollar was near three-year lows ahead of an expected cut in official rates to a record low of 2.5%. The US dollar slipped 0.3% to 97.950 yen after the previous session’s 0.7% decline, its biggest one-day fall in a week. It was not far from a five-week low of 97.585 yen touched on 31 July. Against a basket of major currencies, the dollar dipped 0.1%.
The dollar has weakened since Friday after a soft jobs report saw markets temper expectations the Fed could start scaling back its US$ 85 billion-a-month bond-buying program in September, although a survey showing a pick-up in the US services sector helped limit the losses. Sterling rose to one-week highs after an industry survey gave hope the UK economy was recovering, before easing to US$ 1.5354 in Asian trade.
The Australian dollar was down 0.1% at US$ 0.8927 ahead of the Reserve Bank of Australia’s rate decision, due at 0430 GMT. It fell to 3-year lows below 89 US cents on Monday.
“We may see a sharper selloff in the AUD/USD should the RBA keep the door open to further rate cuts in the coming months,” said David Song, currency analyst at DailyFX. Asian shares measured by MSCI Asia-Pacific ex-Japan fell 0.8%, to be headed for their biggest one-day fall in four weeks. Hong Kong’s Hang Seng underperformed the region, trading down 1.7% on the back of a 4.6% fall in index heavyweight HSBC after the bank posted lower than expected earnings.
In Tokyo, the Nikkei share average shed 1.4% on the back of the firmer yen, which lowers income for exporters such as carmakers.
“We blame the yen’s rise... we had some blue-chip companies like Toyota Motor reporting stellar earnings, but as the yen has strengthened those companies have failed to lift the market and we missed a rally,” said Yoshiyuki Kondo, a strategist at Daiwa Securities.
Of the 133 Nikkei companies that have reported quarterly earnings so far, 60% either beat or met market expectations, according to Thomson Reuters StarMine. That compared with 54% in the previous quarter.
In commodity markets, copper eased 0.3% to around US$ 6,950 a tonne, extending a 0.4% decline on Monday, while gold fell 0.7% after a 0.6% drop in the previous session.
Brent crude prices dipped 0.2% at US$ 108.50 a barrel, extending a 0.3% fall on Monday and heading for a third straight day of loss – which would be its longest losing run since late May.
