Asian shares gain in volatile trade; yen ascends

Saturday, 1 March 2014 08:01 - - {{hitsCtrl.values.hits}}

REUTERS: Asian stocks edged up in late trading after a volatile session on Friday, as investors weighed unrest in Ukraine against Federal Reserve Chairwoman Janet Yellen expressing confidence in the strength of the US economy. The fear factor helped the yen rise against the dollar and euro on its traditional safe-haven appeal as tensions mounted in Ukraine, even after Yellen’s testimony to a Senate committee helped the S&P 500 .SPX close at a record high. European shares were seen edging higher, with sentiment bolstered by expectations that a further drop in euro zone inflation could prompt the European Central Bank to cut rates. Financial spreadbetters predicted Britain’s FTSE 100 .FTSE would open 7 to 15 points higher, or as much as 0.2%; Germany’s DAX .GDAXI to gain 9 to 17 points, or as much as 0.2%; and France’s CAC 40 .FCHI to rise 9 to 13 points, or as much as 0.3%. “We can expect to see Europe’s markets open in positive territory this morning despite concerns about the ongoing and very fluid situation in Ukraine, and the Crimea in particular,” Michael Hewson, Chief Market Analyst at CMC Markets UK, said in a note to clients. Ukraine’s Interior Minister accused Russian forces on Friday of taking control of two airports in the Crimea region and condemned the action as an armed invasion and occupation.

Figures due at 1000 GMT are likely to show euro zone inflation falling to 0.7% in February from 0.8% in the previous month, according to a Reuters survey. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up slightly in late afternoon trading, on track for a modest weekly gain. Tokyo’s Nikkei stock average .N225 skidded 0.6%, down for both the week and the month, but ending well off its session lows. The strength of the yen battered exporter shares and cancelled out any lift from data showing Japanese factory output rose in January at the fastest pace in more than two years and core inflation near a five-year high. Hong Kong shares fell on Friday afternoon, with mainland markets also weaker, as investors cut their exposure in cyclical outperformers ahead of a manufacturing survey and a key China parliamentary meeting next week that will discuss how to implement reforms. “As usual, expectations are running high for some kind of supportive policy, this time for state-owned enterprise reform, but this is a game we have played before. Not much detail usually gets released,” said Jackson Wong, Tanrich Securities’ Vice-President for equity sales. China’s yuan at one point was poised for its biggest daily loss on record and its largest monthly loss in 20 years, as the central bank stepped up its intervention to weaken the currency ahead of the key government meeting. China’s official manufacturing purchasing managers’ index (PMI) for February is due on Saturday, after January showed a dip to an eight-month low. Ukraine increasingly unstable Investors focused on the increasingly unstable situation in Ukraine. The United States told Russia to demonstrate in coming days that it was sincere about its promise not to intervene in Ukraine as armed men stormed the regional parliament and others seized the Crimean airport. The unrest prompted investors to seek the safety of US Treasuries, pushing the benchmark yield to more than three-week lows in Asia. The yield on the 10-year note last stood at 2.647%, up from its US close of 2.642 on Thursday. Yellen said on Thursday the Fed will continue to determine whether severe winter weather was behind recent signs of weakness, and stressed that it would take a “significant change” to the economic outlook to sway the Fed from plans to taper its stimulus. An unexpected rise in US durable goods orders, excluding transportation, also helped US sentiment. The dollar’s early gains against the yen unravelled, with the US unit shedding about 0.3% to 101.82 yen, after dropping as low as 101.55 yen, its lowest since 17 February. “Isolated incidents from Ukraine will continue to move the dollar at least until elections are held there in May,” said Masafumi Yamamoto, Chief Strategist at Praevidentia Strategy in Tokyo. “Any losses the dollar suffers against the yen will be temporary, however, as bargain hunters will be ready each time, supported by the notion that real military conflict will be unlikely,” Yamamoto added. The euro eased slightly on the day to $ 1.3715, though it held above the previous session’s two-week low of $ 1.3641. It also surrendered territory to the yen, losing 0.3% to 139.64, moving back in the direction of a more than two-week low of 138.75 yen touched on Thursday. In commodities trading, gold prices were nearly flat with spot gold trading at $ 1,330.71, but it was on track for its fourth week of gains and biggest monthly gain since July. Oil slipped, taking its cues from unrest in the Ukraine, with Brent crude down about 0.2% at $ 108.78 a barrel. US oil was down 0.5% at $ 101.92, but it was still on track for a monthly gain.