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Asian markets ease after flat Wall St lead

August 30, 2012

HONG KONG: Asian markets fell today after Wall Street closed flat in response to a mixed bag of US economic data, with trade cautious ahead of a speech by Federal Reserve chief Ben Bernanke.

The dollar eased slightly from the gains it made in New York on the back of an upward revision of US gross domestic product growth, while supportive comments by Germany and China for the euro lifted the single currency.

Tokyo fell 0.95%, or 86.03 points, to 8,983.78, Seoul lost 1.15%, or 22.16 points, to 1,906.38, while Sydney was off 0.94%, or 40.7 points, to close at 4,315.7.

In afternoon trade Hong Kong fell 1.24% while Shanghai edged down 0.05%.

In its closely-watched Beige Book the Fed said the US economy continued to grow at a tepid pace in the past two months, with slight improvements in retail sales and the housing market.

However, the report, prepared ahead of the central bank’s policy meeting next month, said many districts saw a softening in manufacturing, the sector that has been a key driver of the recovery from a deep 2008-2009 recession.

Earlier yesterday the government said the economy had expanded at a faster pace in the second quarter than first thought.

The Commerce Department reported a clip of 1.7% for gross domestic product growth in the April-June period, revised from 1.5%.

On Wall Street the Dow and S&P 500 were flat while the Nasdaq rose just 0.13%.

But the news lifted the dollar late Wednesday and it was sitting it 78.70 yen by the end of New York trade, from around 78.50 yen earlier in Asia.

In Asian afternoon trade Thursday the US unit eased slightly to 78.62 yen.

Attention is now on a meeting of central bankers at Jackson Hole, Wyoming, where Bernanke is due to give a speech on Friday, with investors hoping he will outline plans for another round of monetary easing to kickstart the economy.

“Investors are awaiting Jackson Hole and until then, market sentiment is unlikely to improve,” Kenichi Hirano, a market analyst at Tachibana Securities in Japan, told Dow Jones Newswires.

Meanwhile European Central Bank head Mario Draghi added to expectations the lender will resume its sovereign bond-buying scheme.

Writing in the German weekly Die Zeit, he said the ECB would always act within its mandate and ensure price stability, but that it might have to resort to exceptional measures.

“The ECB will do what is necessary to ensure price stability. It will remain independent. And it will always act within its mandate. Yet it should be understood that fulfilling our mandate sometimes requires us to go beyond standard monetary policy tools,” Draghi said.

Nevertheless, there is strong opposition to such moves, particularly in Germany which argues it goes against the very spirit of eurozone treaties.

On currency markets the euro rose after German Chancellor Angela Merkel – who is beginning a two-day visit to China – said there was “absolute political will” to strengthen the currency.

Following a meeting with Merkel, Chinese Premier Wen Jiabao also said Beijing would continue to invest in the debt-troubled European Union.

In afternoon Asian trade the euro bought US$1.2550 and 98.68 yen, from US$1.2526 and 98.61 yen in New York.

Oil was mixed. New York’s main contract, light sweet crude for delivery in October, shed 51 US cents to US$94.98 a barrel and Brent North Sea crude for October was 11 US cents higher at US$112.65.

Gold was at US$1,657.95 by 0705 GMT compared with US$1,665.05 yesterday.

In other markets:

  • Wellington was flat, edging up 0.03%, or 1.18 points, to 3.629.56. Air New Zealand rose 13.41% to NZ$1.01.
  • Taipei fell 0.27%, or 19.71 points, to 7,371.44. Hon Hai Precision added 1.79% at Tw$85.5 while Taiwan Semiconductor Manufacturing Co was unchanged at Tw$82.7.



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