HONG KONG: The euro recovered from early losses on Friday after Pakistan dismissed rumours of a coup while Asian stocks fell as investors fretted about the outlook for corporate earnings.
The dollar eased about 0.2 per cent against a basket of major currencies, pulling back from an overnight rally as investors unwound long dollar positions ahead of the year’s close.
Greece’s fiscal woes continued to weigh on the euro but the currency found support after Pakistan dashed rumours of a coup, which in early trade had sent it skidding further to a nine-month low against the safe-haven Swiss franc.
By the Asian evening, the euro was up 0.2 per cent at $1.4390, rebounding from a three-month low of $1.4304 on Thursday.
Pakistani President Asif Ali Zardari said there was no coup, quickly dousing rumours that started after a government minister suspected of corruption was barred from leaving the country.
Asian stocks slipped as investors became cautious about companies’ earnings prospects and shares of resources companies were sold in reaction to an overnight drop in the price of gold.
‘We have already suggested that investors may be setting up for portfolio readjustments heading into the new year, and still believe we could see gold tumble considerably further before the year is done,’ Investec Bank (Australia) Ltd said in a research note.
The MSCI index of Asia Pacific stocks traded outside Japan, which has rallied more than 60 per cent this year, fell about half a per cent taking the week’s losses to 2.5 per cent. The regional gauge has had a down week in all but one of the last five weeks.
In Japan, the Nikkei share index dipped 0.2 per cent, paring most early losses and the five-year government bond yield slid to a four-year low after the Bank of Japan said it would not tolerate deflation, suggesting further monetary easing was possible.
Shares in Hong Kong and China fell to three-week closing lows, led by banks and properties, after tough new proposals by banking regulators and Beijing’s tighter curbs on buying government land reignited fears about the sectors’ outlook.
Hong Kong’s benchmark Hang Seng Index fell 0.8 per cent, retreating for a fourth straight session as did the Shanghai Composite with a 2.1 per cent drop.
The main index in India fell a per cent, followed by smaller losses in Australia, Singapore and South Korea, while Taiwan eked out a 0.2 per cent gain.
Telstra tumbles
Asian resources stocks were hit after gold fell three per cent in New York while banking shares, including HSBC, lost ground after international regulators proposed tough new capital protection rules from 2012.
HSBC shares in Hong Kong fell nearly a per cent to a three-week low, after a 3.5 per cent slide in London on Thursday.
Gold stabilised, edging toward $1,110 an ounce from a New York close below $1,100, but is about 10 per cent below a record high of $1,226.10 reached on Dec. 3.
Oil rose a per cent to well above $73 a barrel, supported by the prospect of increased winter demand as a cold snap gripped the US Northeast and by the weaker dollar.
Asian equity investors are likely to remain cautious next week as they seek to hold onto stellar gains this year.
Nouriel Roubini, one of the few economists to have accurately predicted the magnitude of the global financial crisis, warned that global markets have rallied ‘too much, too soon, too fast.’
However, an imminent correction was unlikely because a cheap dollar would continue to encourage investors to seek higher-yielding assets for a few months, he said. Roubini sees a dollar rebound in six to 12 months.
In Australia, shares of phone company Telstra tumbled 3.4 per cent after the company cut its sales revenue forecast.
The country’s biggest brewer, Foster’s Group, saw its shares drop nearly two per cent after warning that a strong Australian dollar and weak US demand would cut profits at its wine business.
Some analysts have warned that investors of Australian equities have not sufficiently priced in the impact of the Aussie dollar’s 40 per cent surge this year.
‘It’s been pushed to the back of people’s minds, but the currency is certainly coming home to roost. It is adding to the nervousness in our market,’ said Daniel Manley, a dealer at Burrell & Co in Australia. —Reuters
No comments:
Post a Comment