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Asian stocks retreat from highs, dollar dips again

Jan 17 2018 07:36
Adam Haigh and Cormac Mullen, Bloomberg

Dublin - The dollar declined against most major currencies while Treasuries steadied amid congressional talks to avert a US government shutdown on Friday. Asian stocks pulled back from record highs, following declines in US counterparts.

The MSCI Asia Pacific Index retreated as materials and healthcare stocks weighed. Benchmark indexes from Sydney to Tokyo and Hong Kong were also lower.

The euro strengthened close to a three-year high against the greenback and sterling rose.

The yen steadied after a six-day streak of gains. Bitcoin rebounded above $11 000 after slumping 23% on Tuesday.

Traders are questioning the pace of gains in equity markets at the start of 2018 as the earnings season ramps up and bond investors mull the potential for monetary policy in the US to be tightened more quickly.

The flattening of the yield curve is also back in focus after a brief movement in the opposite direction earlier this month.

"It’s more of a healthy correction" in stocks, said Hartmut Issel, head of Asia Pacific equity and credit at UBS Wealth Management in Singapore, on Bloomberg Television.

"The last two and a half weeks have been very strong and in some cases we were really wondering if you extrapolate this another three or four weeks we would have exhausted the potential we saw for the entire year."

Elsewhere, West Texas oil halted its decline from the highest close in more than three years before US government data forecast to show crude stockpiles fell for a ninth week.

Here’s what to watch out for this week:

Earnings season ramps up: Taiwan Semiconductor Manufacturing Co., ASML Holdings NV, Bank of America and Goldman Sachs Group are among some notable releases. Industrial production in the US probably increased in December, a report may show Wednesday, completing a solid year for manufacturing.

US housing starts probably slipped in December for the first time in three months as frigid winter weather impeded work, forecasts show ahead of Thursday’s release. The Bank of Canada’s interest-rate decision comes on Wednesday.

Monetary policy announcements are also this week due in South Korea, South Africa and Turkey. China releases fourth quarter GDP, December industrial production and retail sales on Thursday.

And these are the main moves in markets:

Stocks

The MSCI Asia Pacific Index declined 0.2% as of 10:30am Tokyo time. Topix index decreased 0.2%. Kospi index dipped 0.5% and Hong Kong’s Hang Seng was down 0.4%.  

Australia’s S&P/ASX 200 Index declined 0.5% to the lowest in a month. Futures on the S&P 500 Index rose 0.1% after the underlying gauge dropped 0.4% on Tuesday.

Currencies

The Bloomberg Dollar Spot Index decreased 0.1%, heading toward the lowest in three years. The Japanese yen was little changed at 110.49 per dollar, and reached the strongest in more than four months.

The euro climbed 0.2% to $1.2290, around its strongest in more than three years.

Bonds

The yield on 10-year Treasuries fell less than one basis point to 2.53%. Japan’s 10-year yield was unchanged at 0.083%.  

Commodities

West Texas Intermediate crude rose 0.3% to $63.94 a barrel. Gold gained 0.2% to $1 341.55 an ounce, the highest in almost 19 weeks. LME copper climbed 0.3% to $7 098.50 per metric tonne.

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equities  |  markets  |  asian markets
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