Thursday 18 / April / 2024
Hong Kong: Asian markets fell Monday after last week's volatility, but the euro held on to gains thanks to healthy economic data and hopes that German Chancellor Angela Merkel is close to forming a government.
Investors ignored another strong lead from Wall Street, where the S&P 500 and Nasdaq chalked up fresh records on expectations of strong sales on Black Friday and Cyber Monday — the two major post-Thanksgiving shopping days.
With little to drive buying on Monday, Asian profit-takers moved in, with eyes on the release of key data in major economies this week — from China to the United States.
Shanghai slipped almost one per cent, with dealers still on edge after Thursday's sharp losses fuelled by concern about a crackdown on speculative trading.
Hong Kong was down 0.8 per cent in the afternoon, while Tokyo closed 0.2 per cent lower. Seoul shed 1.4 per cent, dragged down by Samsung Electronics' more than five per cent slump in response to Morgan Stanley's decision to cut its price recommendation for the firm.
Singapore lost 0.2 per cent and Taipei retreated one per cent, but Sydney edged up 0.1 per cent while Wellington put on 0.6 per cent.
In currency trading the euro stood firm against the dollar, after surging on Friday in reaction to healthy economic data. A gauge of the German business climate hit an all-time high in November despite political uncertainty.
Germany hopes
There are also hopes Merkel can hammer out a deal to form a new government for Europe's biggest economy.
The Social Democrats said they were ready to hold talks with the chancellor, who is facing pressure to reach an agreement to end weeks of turmoil.
The euro plunged last week after talks to form a new government with the pro-business Free Democrats and the left-leaning Greens broke down, raising the prospect of fresh elections.
Adding to the upbeat euro sentiment was last week's dovish Federal Reserve minutes that have led some traders to lower their expectations on the pace of US interest rate rises, while the European Central Bank is looking more bullish.
"Too many positive developments to ignore suggests the market will set sights on the $1.2000 level," Stephen Innes, head of Asia-Pacific trading at OANDA, said in a commentary.
"The market continues to underprice the ECB risk, but with the recent string of uproarious EU economic data, surely this will be too difficult for the ECB to ignore, and at minimum moderate their 'lower for longer' stance in spite of inflation undershooting expectations."
Oil prices dipped after Friday's gains that saw West Texas Intermediate hit its highest level since July 2015 on reports Russia and Opec could agree a deal to extend production cuts when they meet this week.
"Opec and Russia appear to be in agreement to extend the oil production cut until the end of 2018 but the final details need to be worked out this week," said Margaret Yang Yan, market analyst at CMC Markets Singapore.
In focus this week is the congressional hearing for Jerome Powell, Donald Trump's pick as the next Fed boss, while current governor Janet Yellen is also due to speak.
Senators are also expected to vote this week on a tax reform bill, with fears that failure to pass it could batter global markets.
