Asia markets mostly higher but uncertainty prevails
Hong Kong: Asian markets mostly rose on Thursday following broad losses the previous two days but they struggled to maintain early momentum as analysts warned caution was prevailing on geopolitical worries and fading hopes for Donald Trump’s stimulus drive.
Energy firms were among the main laggards, tracking losses in their US counterparts, after a surprise jump in US petroleum inventories sent oil prices skidding almost four per cent on Wednesday.
Hong Kong added one per cent, Sydney put on 0.3 per cent by the close, Seoul jumped 0.5 per cent and Singapore firmed 0.1 per cent.
But Tokyo ended marginally lower, while Shanghai was also flat. Wellington and Taipei slipped.
Markets have been rattled in recent weeks by a series of events that upended the optimism that welcomed in the year.
Trump’s failure to push through key healthcare reforms last month dealt a huge blow to his chances of passing the tax-cutting, big-spending plan that had helped fan a global rally since his election win in November.
That was followed by a US missile strike on Syria — which hit US-Russian relations — and the ongoing sabre-rattling by North Korea that has fuelled worries about nuclear conflict.
At the same time France and Germany are preparing for elections that could have big implications for the euro zone, and Britain’s shock decision to call a general election next month is also keeping dealers on edge.
An uninspiring Federal Reserve report Wednesday on the US economy also failed to provide any lift.
“Geopolitical angst, a faltering US economy and the UK snap election are consuming investors mindsets,” said Stephen Innes, senior trader at OANDA. “With so many uncertainties offering few incentives for investors to re-engage risk exposure, clearly there is little market bravado as dealers appear to be disposed to participate after the fact, rather than play the post-election knee-jerk.”
The dollar inched lower against a basket of major currencies on Thursday, suffering from a solid performance by the euro before the first round of French presidential elections and from an improvement in sentiment towards Britain’s pound this week.
The biggest mover overnight was the New Zealand dollar, jetting higher after inflation surged past 2 per cent to its highest in five years, bolstering the case for a rise in kiwi interest rates over the next year.
Attention is largely focused on the French vote, however. Despite a surge in measures of expected volatility, the euro rose another third of a per cent to $1.0748 in early European trade, its strongest in three weeks.
Even with polls giving both far-right and far-left candidates a chance of making it into next month’s run-off, the single currency has gained 1.3 per cent this week, its strongest performance in 2017 so far.
Traders put that down more to a broadly weaker tone to the dollar, which sold off across the board on Tuesday as faith in continuing US economic out-performance and the Trump administration’s promises of tax reform wavered.
“I’m more inclined to think that we are dealing with that kind of dynamic,” said Barclays strategist Hamish Pepper.
“We still expect the dollar to strengthen a bit more into the end of year, but I do see more and more signs that perhaps the dollar has peaked. The data has started to look slightly more inconsistent than it was, and there is the doubt over what we will get on the fiscal front.”
By 08:48 GMT, the dollar had fallen 0.14 per cent to 99.601. It was marginally higher at 108.96 yen but around 0.4 per cent weaker against sterling at $1.2824.
The bounce for the New Zealand dollar comes at a time of flux for monetary policy in a number of developed economies. — AFP