Asian stocks slip, dollar slumps

Thursday, 10 July 2014 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: Asian stocks fell on Wednesday after US stocks skidded, while a drop in US Treasury yields kept up pressure on the dollar. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down about 0.2% in early trade, and Japan’s Nikkei stock average .N225 dropped about 0.6%. Traders were awaiting China inflation data at 2130 EST for further clues on whether the economy is stabilizing, ahead of its second-quarter GDP next week.

On Wall Street, major stock indexes sagged with the Standard & Poor’s 500 index .SPX shedding 0.7% as investors turned cautious before the start of earnings season. The benchmark 10-year Treasuries yield US10YT=RR slipped to 2.563 in Asia, from Tuesday’s US close of 2.565%. Minneapolis Federal Reserve President Narayana Kocherlakota put further pressure on yields when he said the recent drop in US unemployment was welcome, but the labour market still has a long way to go before the Fed reaches its goals. Upbeat employment data for June released last week had prompted some Wall Street economists to predict the Fed would raise interest rates earlier than some previously thought. “Unlike other central banks who have recently expressed their desire to become more active, the Fed remains comfortable with their current course and has no desire to alter (the) market’s expectations,” Kathy Lien, Managing Director of FX strategy at BK Asset Management, said in a note to clients. Later on Wednesday, the Fed will release minutes of its latest policy meeting, and ECB officials including President Mario Draghi are scheduled to speak. Downbeat German economic data on Tuesday increased the appeal of relatively higher-yielding Treasuries, as it gave investors reason to believe that the European Central Bank could take further easing steps to support the euro zone economy. Germany posted a larger-than-forecast drops in exports and imports in May, suggesting Europe’s largest economy is showing signs of weakness. The euro was steady in Asian trade at $ 1.3615 EUR=. Against the yen, the greenback touched a fresh one-week low of 101.47 yen JPY=, which helped push down the dollar index .DXY slightly to 80.144 .DXY. In commodities trading, US oil CLc1 inched up about 0.1% to $ 103.48 per barrel after slipping for eight straight sessions as global supply fears eased.