Stock fall as rally loses steam, Aussie advances | Fin24

Stock fall as rally loses steam, Aussie advances

Jan 11 2018 07:38
Adam Haigh, Bloomberg

Sydney - The stellar run for  equities that ushered in the new year showed signs of waning in Asia on Thursday as the yen remained near a six-week high and traders dialled back their appetite for risky assets amid a jump in government bond yields.

Shares from Sydney to Shanghai retreated after the S&P 500 Index declined overnight. While a tad weaker on Thursday, the yen remains on course for its best week since mid-November.

Treasuries continue to grip traders after a roller-coaster day on Wednesday, when news broke that senior officials in Beijing have recommended slowing or halting purchases of US bonds.

Yields edged lower after climbing to the highest since March. The Aussie rose as electronics goods sales drove strong retail sales.

The best start to a year on record for Asian equities is being greeted with concern that rising yields may test stock valuations. This week’s climb in Treasury yields caused one key share-price measure to signal that conditions are the most overheated since 2010.

Goldman Sachs Group Inc. has warned shifting expectations about the pace of US monetary tightening may trigger a stock-market correction.

"It’s better to take some chips off the table - markets do look a little frothy," Mikio Kumada, Hong Kong based global strategist at LGT Capital Partners, told Bloomberg TV. "Eventually there will be a sell off or a correction that will offer better opportunities."

The Canadian dollar and Mexican peso added to declines triggered by a report that Canadian officials see rising odds the Trump administration will leave Nafta. Canadian officials, speaking on Wednesday on condition they not be identified, said there’s an increasing likelihood President Donald Trump will give notice about a withdrawal from Nafta, threatening the decades-old trade regime.

China’s showing once again that it’s not afraid to wield the clout of its hoard of Treasuries to catch the attention of US officials and the world’s biggest debt market. Read more on that story here.

Here are some of the main events to watch for this week:

US inflation data are forecast to show price pressures remain muted for now, giving hawks little reason to argue for faster tightening. Outgoing New York Federal Reserve Bank President Bill Dudley is scheduled to speak later this week. JPMorgan Chase & Co. and Wells Fargo & Co. are due to report earnings on Friday.

These are the main moves in markets:


Japan’s Topix index slid 0.4% as of 11:23am in Tokyo.  Hong Kong’s Hang Seng Index and Shanghai Composite slid 0.4% each.  Australia’s S&P/ASX 200 Index fell 0.5% and South Korea’s Kospi declined 0.3%.

Gauges in Singapore, Malaysia and Taiwan were all down.

Futures on the S&P 500 were little changed after the underlying gauge slipped 0.1% Wednesday, paring losses of as much as 0.6% earlier in the session.

The MSCI Asia Pacific Index lost 0.4%, having climbed 4.1% from the start of the year through Wednesday.


The yen traded at 111.62 per dollar after rising 1.1% on Wednesday. The Bloomberg Dollar Spot Index was flat following its 0.2% drop on Tuesday. The loonie nudged lower t0 C$1.25534 after sinking 0.7% in the previous session.

The euro rose 0.1% to $1.1964. The Aussie climbed 0.4% to 78.73 US cents.


The yield on 10-year Treasuries was little changed at 2.55%. Australia’s 10-year yield climbed more than four basis points to 2.76%.


Gold futures rose 0.1% to $1 318.29 an ounce. West Texas Intermediate crude was flat at $63.58 a barrel, trading near the highest in more than two years.

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