Asian Shares, Dollar, Oil Dip But Pull Off Lows

Big 5

Asian shares, the dollar and oil prices all slumped on Wednesday, pulling back as global growth concerns and political uncertainty in Greece prompted a flight to safety.

Financial spreadbetters predicted a brighter day ahead in Europe after steep losses in the previous session. Britain’s FTSE 100 .FTSE was expected to open 18 to 26 points higher, or as much as 0.3 percent; Germany’s DAX .GDAXI was seen opening 69 to 78 points higher, or 0.8 percent; and France’s CAC 40 .FCHI was called opening 26 to 31 points higher, or 0.7 percent.

“When European markets closed yesterday it looked as though the bears were going to run rampant across equities all over the world. However, after the European close, U.S. markets were able to pare back the majority of the earlier declines,” Capital Spreads dealer Jonathan Sudaria said in a note.

On Wall Street overnight, major indexes finished lower, though the S&P 500 .SPX ended nearly flat.

Still, investors could take little comfort from data showing China’s annual consumer inflation eased to a five-year low of 1.4 percent in November, signaling persistent weakness in the world’s second-largest economy and leading some to predict that Beijing will move more aggressively to head off deflation.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.2 percent, but was off lows as Chinese shares rebounded after a sharp selloff on Tuesday. The Shanghai Composite Index .SSEC was up 2.4 percent, a day after a rollercoaster session in which it marked a 3-1/2-year high before collapsing to lose more than 5 percent.

Japan’s Nikkei stock average .N225 tumbled 2.3 percent, as a stronger yen prompted investors to sell exporters’ shares.

“Market euphoria over the recent positive news is fading out for now as investors shift to risk-averse from risk-taking,” said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.

A Japanese government survey released before the market opened showed big Japanese manufacturers grew less optimistic in October-December and see conditions worsening further in the following quarter, suggesting that the economy is slow to recover from a recession.

A separate survey showed Japanese consumer confidence worsened for a fourth straight month in November. The government reset its view on consumer confidence to weak.

Brent crude LCOc1 slipped about 0.8 percent to $66.29 a barrel, though it pared losses and remained well above a five-year low of $65.29 touched on Tuesday. U.S. crude futures CLc1 were down 1 percent at $63.18. Oil prices have been under pressure amid a massive supply glut, after OPEC decided against cutting output.

Adding to pressure on crude prices, the American Petroleum Institute, an industry group, reported a 4.4 million barrel build in crude stockpiles last week when analysts had predicted a drop.

On Tuesday, Greek shares and sovereign bond markets plunged after the government in Athens brought forward a presidential vote that heightened uncertainty over the country’s transition out of its IMF/EU bailout.

That led to a flight to safety, pressuring yields on U.S. Treasuries and in turn the dollar. The yield on benchmark 10-year notes US10YT=RR stood at 2.218 percent in Asian trade, down from its U.S. close of 2.220 percent on Tuesday.

The dollar was down about 0.5 percent on the day at 119.04 yen JPY=, after shedding more than 2 percent at one point on Tuesday to trade as low as 117.90 yen. The greenback marked a seven-year high of 121.86 yen on Monday.

The euro added about 0.2 percent on the day to buy $1.2391 EUR=, while the dollar index .DXY, which tracks the U.S. unit against a basket of six currencies, edged down about 0.1 percent on the day to 88.564.

Spot gold XAU= added about 0.5 percent to $1,237.23 an ounce after marking a seven-week high.

Source : Reuters

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