Saturday Nov 16, 2024
Saturday Nov 16, 2024
Saturday, 13 July 2013 00:00 - - {{hitsCtrl.values.hits}}
“China’s weak foreign trade data for June provide a pessimistic edge to second quarter GDP estimates. Monthly data, including industrial production and fixed investment, show China’s economy slowed further in the second quarter,” said Sydney Moody’s analytics economist Alaistair Chan.
“This year is shaping up to be the slowest since 1999, and the risk is increasing that full-year GDP growth will come in below the government’s 7.5% target.”
Confirmation of any further weakness in China’s economy would dampen risk appetite.
MSCI’s broadest index of Asia-Pacific shares outside Japan crept up a tepid 0.2%, losing steam after three straight sessions of solid gains.
It was, however, on track to end up more than 3% on the week, its best since September.
Tokyo’s Nikkei was flat, South Korea’s KOSPI eased 0.5%, Hong Kong’s Hang Seng slipped 0.2% and China’s mainland shares shed 0.5%.
Bucking the region’s weaker trend, Australia’s ASX 200 index climbed 0.5%, thanks mostly to strength in the major miners such as BHP Billiton.
The generally lacklustre performance on Asian bourses came after a powerful rise on Thursday and followed a record closing high for the US S&P 500 index and Dow Jones.
Investors had cheered Federal Reserve Chairman Ben Bernanke’s commitment to keep monetary policy accommodative for the foreseeable future.
Before his comments, markets had started to price in the prospect of the Fed scaling back its bond-buying programme as early as September following a string of encouraging data that underscored a clear recovery in the economy.
Dollar steadier
Currency markets were steadier following a breathtaking sell off in the dollar in the past 24 hours as investors cut bullish positions on Bernanke’s pledge.
The dollar index, which tracks the greenback’s performance against a basket of major currencies, wallowed at 2-1/2 week lows, having slumped more than 2%. That fall was the steepest in four years, and normally only seen during financial crises.
The euro jumped as far as US$ 1.3208, well off this week’s trough of US$ 1.2755. It has since retreated to US$ 1.3093, but was still around 2% higher on the week.
Analysts at BNP Paribas said the fall in the dollar should be seen as an opportunity to buy because they still expect the Fed to begin winding down its stimulus later this year.
“We forecast an acceleration of US GDP growth in Q3 and Q4 that is consistent with the Fed starting its tapering process in the second half of 2013,” Steven Saywell wrote in a report.
“We choose to recommend a short GBP/USD at 1.5130, targeting a move to 1.45 with a stop at 1.5310,” said Saywell, adding he believed the Bank of England would ease policy in August.
Caution ahead of the Chinese data saw commodity currencies such as the Australian dollar give back much of the recent gains made against the greenback.
The Aussie slipped to US$ 0.9166 from Thursday’s high of US$ 0.9306, keeping in sight a 34-month trough of US$ 0.9036 set earlier this month.
The Aussie’s decline came even as commodity markets were bolstered by Bernanke’s commitment to keep policy loose. Copper was a touch softer on the day at US$ 6,976 a tonne, having jumped 2.6%, while gold stood at US$ 1,284 an ounce after a 1.7% rally.
Oil lost a bit of momentum as traders took profits on a three-week rally that lifted prices to 15-month highs. US crude eased back to around US$ 105 a barrel, having reached US$ 107.45.
