Asian markets sink at end of healthy week, dollar up

556

HONG KONG, Nov 9, 2018 (BSS/AFP) – Asian markets turned lower Friday as
investors took their foot off the pedal at the end of a broadly positive
week, while the dollar strengthened after the Federal Reserve flagged more
interest rate hikes down the line.

Energy firms were among the biggest losers as oil prices fell into a bear
market after dropping 20 percent from their recent highs.

The US midterms provided a much-needed filip to equities as traders bet
that the expected gridlock on Capitol Hill would keep Donald Trump from
pushing through measures that would likely stoke inflation and in turn rate
hikes.

Rising US borrowing costs have been one of the major issues weighing on
global equities this year.

However, after its latest policy meeting Thursday the Fed repeated that it
expected “further gradual increases” in the key interest rate as the economy
goes from strength to strength.

The central bank said growth “has been rising at a strong rate”, jobs were
picking up, unemployment dropping and and household spending “growing
strongly”.

While it did not lift rates, observers said another move upwards next
month was all but nailed on.

US markets closed mostly lower, with Asian equities following suit.

Tokyo was 0.7 percent off by lunch, Hong Kong shed 1.8 percent and
Shanghai fell 0.9 percent. Sydney eased 0.4 percent, Singapore sank 0.9
percent and Seoul was off 0.2 percent. Taipei, Manila and Jakarta were also
well down.

The dollar, which turned lower after the election results, picked up
against most other currencies in New York and continued that trend in Asia,
with emerging market and other higher-yielding units sharply lower.

– Oil drops further –

“There is a sense that for now US-related incentives have all come out.
But of course, the US-China summit talks at the end of the month requires
attention,” Mizuho Securities said in a note.

“We expect the market’s attention for this month will go to Europe,” with
the region’s overall growth, Italian fiscal conditions, and the Brexit
negotiations in focus, Mizuho said.

The Mexican peso plunged more than one percent after president-elect
Andres Manuel Lopez Obrador introduced plans to slash the fees banks can
charge clients. The leftist has worried the business sector with rhetoric
about overhauling Mexico’s economic model when he takes office on December 1.

The pound is attracting attention as a deadline approaches for Britain and
the EU to reach a post-Brexit deal, with speculation the two sides are close
to an agreement.

Energy firms were deep in negative territory after another sharp sell-off
in oil Thursday, which came on the back of data showing a surge in US
stockpiles.

Crude has taken a battering since hitting four-year highs last month as
rising production, the brewing China-US trade war and easing concerns about
the impact of sanctions on Iran. Both main oil contracts were down Friday.

“When you factor in that Saudi Arabia and Russia have been ratcheting up
production since June, there’s a good reason the bears are holding court and
the primary reason why prices are plummeting,” said Stephen Innes, head of
Asia-Pacific trade at OANDA.

Among the worst-hit energy firms were CNOOC, which lost almost four
percent in Hong Kong, while Tokyo-listed Inpex sank 2.5 percent and
Australia’s Woodside Petroleum dropped 1.5 percent.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.7 percent at 22,338.26 (break)

Hong Kong – Hang Seng: DOWN 1.8 percent at 25,751.43

Shanghai – Composite: DOWN 0.9 percent at 2,612.26

Euro/dollar: DOWN at $1.1362 from $1.1364 at 2200 GMT

Pound/dollar: DOWN at $1.3060 from $1.3063

Dollar/yen: DOWN at 113.90 yen from 114.07 yen

Oil – West Texas Intermediate: DOWN 15 cents at $60.52 per barrel

Oil – Brent Crude: DOWN four cents at $70.61 per barrel

New York – Dow: FLAT at 26,191.22 (close)

London – FTSE 100: UP 0.3 percent at 7,140.68 (close)