Asian markets came under pressure on Thursday, after Australia posted stronger-than-expected trade surplus and South Korea’s consumer prices rose at the fastest pace since 2012.
Down Under, the ASX 200 slipped 0.07 percent, but losses were capped by a strong performance in the gold sub-index, which was up 2.38 percent.
Australian data showed a record seasonally-adjusted trade surplus of A$3.5 billion ($2.67 billion) in December, versus analysts expectations of a A$2.2 billion surplus.
Exports in December rose by 5 percent due to higher iron ore and coal prices, while imports rose by 1 percent from the previous month. The stronger-than-expected trade figures also gave the Australian dollar a boost above the $0.76 handle.
As well, reports surfaced of tension between President Donald Trump and Australian Prime Minister Malcolm Turnbull in a phone call at the weekend
Japan’s benchmark index was down 0.52 percent as the yen weakened.
Japanese policymakers rejected Trump’s charges of currency manipulation on Wednesday.
Prime Minister Shinzo Abe defended the Bank of Japan’s huge stimulus program and said that it was to reflate the economy, and was not currency manipulation.
Takeda Pharmaceutical bucked the trend to trade higher by 2.56 percent, a three-week high, after it rose its fiscal year sales and net profit forecast.
South Korea’s Kospi was wavering for most of the early trading session and last traded up 0.06 percent after data showed that consumer prices rose 2 percent in January on the back of higher oil prices, beating a Reuters forecast of 0.4 percent.
But the East Asian country’s political uncertainty continues to weigh on the market, after former United Nations Secretary-General Ban Ki-moon dropped out of the running to become the South Korean president.
Hong Kong’s Hang Seng was down 0.54 percent in early trade. Markets in China are closed and will reopen on Friday after a week-long Lunar New Year break.
The dollar index remained below the 100 handle to trade at 99.536 during Asian trade.
“It’s been a tough few days for USD bulls as the overriding theme of 2017, the trajectory of US interest rates has been subsumed in a constant stream of White House headlines. The overall effect has been to turn the market into a short-term headline driven beast,” said Jeffrey Halley, senior market analyst at OANDA, in a note on Thursday.
During the Asian session, Dow futures fell 0.83 percent or 55 points at 11:30 a.m. HK/SIN, S&P 500 futures were also in the red, down 0.1 percent, while Nasdaq futures dipped 0.39 percent or 20.25 points.
Spot gold, usually a safe-haven play, gained 0.46 percent to $1,214.71 per ounce. Safe-haven currencies are also getting a leg up, with yen strengthening to 112.84 against the greenback, and the Kiwi rising to $0.7299.
The Australian dollar jumped 0.59 percent to trade at $0.7634 by 11:35 a.m. HK/SIN.
The Dow Jones industrial average was up 0.14 percent to 19,890.94, while the S&P 500 inched higher by 0.03 percent to 2,279.55, and the Nasdaq added 0.5 percent to 5,642.65.
Overnight, the Federal Reserve kept its benchmark overnight lending rate target at 0.5 percent to 0.75 percent, and its statement noted that there were improvements to sentiment.
“Measures of consumer and business sentiment have improved of late,” the Federal Open Market Committee said in its statement, using new language that jibes with voices on Wall Street following the election of Donald Trump as president.
The Fed raised rates for just the second time in a decade at its December meeting, and it also hinted at the possibility of three rate hikes this year.
“The Fed has shown a united front when it comes to keep the interest rate at a current level. This pretty much signals to the market that they were ahead of themselves and we may not see three rate hikes this year either,” said Naeem Aslam, chief market analyst at ThinkMarkets, in a note on Thursday.
“The reality is that the Fed is very much shaken by the new U.S. president and his uncertain bold actions,” Aslam said.
In other Trump-related news, geopolitical tensions spilled into the crude oil market after the U.S. President took an aggressive stance towards Iran for test-firing a ballistic missile.
Tehran confirmed that it fired a new missile test on Wednesday but said it did not violate the nuclear deal, while U.S. national security adviser Michael Flynn said otherwise, and that the United States is officially putting Iran on notice.
Oil prices rose sharply after Flynn’s comments on concerns that Trump could take action that would hurt Iran’s efforts to revive its oil and gas industry. Both U.S. crude and Brent crude settled up more than $1 per barrel on Wednesday during U.S. hours.
Trump subsequently issued a tweet that Iran’s influence in neighboring Iraq has expanded.
During Asian trade, U.S. crude fell 0.61 percent to $53.55 a barrel, as Brent crude dropped 0.46 percent to $56.54, likely due to the Energy Information Administration’s data revealing that U.S. crude stockpiles rose by 6.5 million barrels last week, surpassing analyst expectations for an increase of just 3.3 million barrels.
On the economic data front, investors await the Bank of England’s (BOE) monetary policy decision, which is widely expected to be a no change to interest rates, after U.K. economy continued to beat gloomy forecasts since the EU referendum last June.