Asian shares stutter on Ukraine tension, event risk

Tuesday, 29 April 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Asian shares wavered in choppy trade on Monday after an uninspiring performance on Wall Street and amid increasing tension in Ukraine, which kept risk appetite in check and helped bolster the safe-haven yen. Pro-Russian rebels paraded European monitors they are holding in eastern Ukraine on Sunday, freeing one but saying they had no plans to release another seven as the United States and Europe prepared new sanctions against Moscow.

MSCI’s broadest index of Asia-Pacific shares outside Japan oscillated between positive and negative territory, and was last trading flat. Japan’s Nikkei stock average skidded 1.2%, despite data released before the market opened showing retail sales rose in March at their fastest pace in 17 years ahead of a sales tax hike. “Weaker US equities and the stronger yen is being received negatively by the domestic stock market. Potential buyers are also sidelined ahead of tomorrow’s public holiday,” said Yutaka Miura, senior technical analyst at Mizuho Securities in Tokyo. Tokyo markets will be closed for Showa Day on Tuesday, the birthday of the previous emperor. Caution ahead of central bank meetings this week, as well as key US jobs data on Friday, also kept investors wary. Non-farm payrolls are expected to show an April rise of more than 200,000, as harsh winter weather finally dissipated and a later Easter holiday led to extra hiring. Federal Reserve policymakers will meet on Tuesday and Wednesday and are expected to unanimously decide to continue tapering the central bank’s massive bond-buying stimulus for now. Policymakers were expected to hotly debate future actions, such as what economic conditions would set the stage for a rate hike. “With the steady improvement in US labour data, there exists a very small tail risk of a more hawkish lean,” strategists at Citi wrote in a note to clients. The Bank of Japan will release new economic projections following its meeting on Wednesday, at which it is expected to stand pat on policy. The BOJ will likely keep its inflation forecast for fiscal 2015 roughly unchanged from the current 1.9%, and is also set to estimate fiscal 2016 inflation close to 2%, signalling that it is optimistic of achieving sustained price rises over a longer time frame, sources have told Reuters. On Wall Street on Friday, the three main US stock indexes all fell for both the session and the week, as disappointing earnings from Amazon and Ford on Thursday and the rising Ukraine tensions sapped sentiment. Major currency pairs remained locked in recent ranges, with the heightened Ukraine crisis bolstering the safe-haven yen. The dollar inched down 0.1% to 102.14 yen, within sight of a one-week trough of 101.96 yen hit on Friday, while the euro also dipped about 0.1% to 141.19 yen. The euro edged down about 0.1% to $1.3824 after it added 0.2% last week. That helped the dollar index gain nearly 0.1% to 79.780, after it lost 0.1% last week. In commodities trading, the Ukraine unrest helped push gold up about 0.1% to $1,303.96 an ounce after it earlier hit $1,306.11 – its highest since 16 April. Brent crude gained 0.2% to $109.82 a barrel, buoyed by the rising Ukraine tensions and Libya’s delay in re-opening a damaged eastern port. Copper climbed 0.4% to $6,790.25 a tonne after touching its highest in seven weeks on Monday on tight Chinese copper supply, while nickel pushed to its strongest in almost 15 months in the wake of Indonesia’s ban on ore shipments.

Gold at 1-1/2 week high as Ukraine tensions drive safe-haven bids

Reuters: Gold climbed to its highest in 1-1/2 weeks on Monday, steadying above $1,300 an ounce as weaker equities and escalating geopolitical tensions in Ukraine boosted the metal’s safe-haven appeal. Traders were cautious about the price gains as they said the tensions could be short-lived and that outflows from gold-backed exchange traded funds had only paused, rather than reversing. They were also waiting for US nonfarm payrolls report and the Federal Reserve’s policy meeting later in the week for stronger trading cues. “While the price break over $1,300 may be construed as positive for the bullion market, gains that have historically been boosted by bouts of rising geopolitical tensions tends to be fleeting and can be erased just as fast as they materialise,” HSBC analysts said in a note. Spot gold had risen 0.07% to $1,303.80 an ounce by 0327 GMT, after earlier hitting $1,306.11 – its highest since 16 April. The rising tensions sent risk-averse investors scurrying out of global equities, and into safe-havens such as gold. Investor sentiment towards gold has improved in recent days. Hedge funds and money managers raised their bullish bets in gold and silver futures and options, their first increase in five weeks, according to data from the Commodity Futures Trading Commission on Friday. SPDR Gold Trust, the world’s biggest bullion ETF, has not seen any outflows since 22 April though it hasn’t seen any inflows either.