The Financial Express

Asia shares hover near two-month low as growth, US policy risks weigh

| Updated: December 08, 2017 12:44:14

Evaly and Fianancial Express Evaly and Fianancial Express
An investor looks at an electronic board showing stock information at a brokerage house in Shanghai, China November 24, 2017. Reuters An investor looks at an electronic board showing stock information at a brokerage house in Shanghai, China November 24, 2017. Reuters

Asian shares hovered near two-month lows on Thursday as softer oil and copper prices and uncertainty over US policy kept many investors on the sidelines, even as some high-tech bellwethers bounced back after a searing sell-off.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was barely changed. It has slipped 4.7 per cent from a 10-year peak hit on November 23 as investors booked profits after robust gains this year.

While some technology bellwethers such as Tencent (0700.HK) and Alibaba (BABA.K) rebounded, many others including materials shares, such as Korea’s Posco (005490.KS), were sluggish.

In Japan, the Nikkei .N225 gained 1.3 per cent after having suffered its biggest fall since late March on Wednesday.

Investors are looking to final tax reform legislation in the United States, where a potential US government shutdown looms if Congress fails to agree on a spending package.

There are also fears of a violent backlash in the Middle East from President Donald Trump’s recognition of Jerusalem as Israel’s capital.

“I would say markets are going through a healthy correction after their rallies during the past three months, or six months. I don’t think we need to panic,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

MSCI's gauge of stocks across the globe .MIWD00000PUS stood near Wednesday's two-week low while Wall Street's benchmark S&P 500 index .SPX edged down for its fourth straight session of losses.

A relentless selloff in US technology shares, which has pressured global equities in recent weeks, subsided somewhat with S&P technology shares .SPLRCT bouncing slightly 0.75 per cent.

But the energy sector dragged the US market lower overnight as oil prices dropped.

Oil prices flirted with two-week lows after a big fall on Wednesday, when a sharp rise in US inventories of refined fuel suggested demand may be flagging, while US crude production hit another weekly record.

US West Texas Intermediate crude futures CLc1 traded at $56.14 per barrel, up 0.3 per cent in Asian trade but not far off Wednesday’s low of $55.87.

Brent futures LCOc1 gained 0.3 per cent to $61.42 per barrel, after having fallen to $61.13 on Wednesday, its lowest since mid-November.

The price of copper, seen as barometer of global economic health because of its extensive industrial use, also fell sharply earlier this week, raising worries about the world growth outlook.

“When you look at growth in China’s industrial output and copper price over the last 10 years, you could say that copper still looks a bit expensive. I wouldn’t be surprised to see further drop in copper if investors grow wary of the possibility of slowdown in China’s output,” said Makoto Noji, senior strategist at SMBC Nikko Securities.

Copper CMCU3 traded at $6,578 a tonne, up 0.4 per cent for the day but still not far from a two-month low of $6,507.5 touched on Tuesday.

In the currency market, the dollar stood near a two-week high against a basket of currencies but lacked momentum as many players looked to how the US Republicans in the House and the Senate will bridge differences on tax plans.

The euro EUR= fetched $1.1800, having slipped to a two-week low of $1.1780 on Wednesday.

The dollar eased to 112.44 yen JPY=, slipping further from Monday's high of 113.09, which was its highest level in more than two weeks.

The British pound was on the defensive after hitting a one-week low of $1.3358 on Wednesday on concerns a Brexit deal may be unlikely before next week’s key EU summit due to an impasse over the Irish border.

The pound last traded at $1.3381.

Bitcoin continued to swing wildly, surging 3.5 per cent to a new record of $14,095 BTC=BTSP at one point on cryptocurrency exchange Bitstamp. But by late morning it had pulled back to $13,768, up about 1 per cent on the day.

Silver XAG= extended its decline since late last month to hit a near five-month low of $15.94 per ounce.

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