1. Asian shares at 1-month low on US Fed, global growth concerns

Asian shares at 1-month low on US Fed, global growth concerns

Over the weekend, financial markets were served a grim reminder of soft patches in the global economy in the form of disappointing Chinese trade figures.

By: | Tokyo | Published: November 10, 2015 8:08 AM
asian stock market

Asian shares slipped to one-month lows on Tuesday as the spectre of higher borrowing costs in the United States and slower global economic growth prompted investors to trim their exposure to riskier assets. (AP)

Asian shares slipped to one-month lows on Tuesday as the spectre of higher borrowing costs in the United States and slower global economic growth prompted investors to trim their exposure to riskier assets.

Over the weekend, financial markets were served a grim reminder of soft patches in the global economy in the form of disappointing Chinese trade figures. Focus now turns to consumer and wholesales price data from China later in the day.

The OECD said in a report on Monday that global trade flows have fallen dangerously close to levels usually associated with a global recession, although steps taken by China and others should ensure a pick-up in 2016.

“After share prices have recovered quite a lot (last month), their rally is coming to a halt for now as markets are trying to price in a Fed rate hike in December,” said Takeru Ogihara, chief strategist at Mizuho Trust Securities.

MSCI’s broadest index of Asia-Pacific shares outside Japan  fell 0.4 percent, while Japan’s Nikkei  dropped 0.8 percent from a 2 1/2-month high hit on Monday.

Surprisingly strong U.S. jobs data released on Friday has dramatically changed investors’ perception on the Federal Reserve’s monetary policy track, with money market futures <0#FF:> pricing in more than a 70 percent chance of a rate hike next month.

The 10-year U.S. bond yield touched a 3-1/2-month high of 2.377 percent on Monday and last stood at 2.349 percent.

The two-year Treasuries yield hit 5-1/2-year high of 0.958 percent on Friday and was last at 0.890 percent.

Investors, worried that rising borrowing costs could crimp profit margins of many businesses, took profits from recent gains in global equities.

On Wall Street, the S&P 500 index suffered its worst loss in six weeks on Monday, falling 1.0 percent.

On the other hand, higher U.S. interest rates make parking funds in the dollar more attractive than at present, especially as some of the dollar’s major rivals like the euro have negative interest rates.

A consensus is forming at the European Central Bank to take the interest rate it charges banks to park money deeper into negative territory in December, four governing council members told Reuters.

Such a divergent policy outlook helped to cap the euro and lift the dollar, although the U.S. unit slipped a tad on Monday on profit-taking after sharp gains on Friday.

The dollar’s index fell to 98.956  from  Friday’s seven-month high of 99.345.

Against the yen, the dollar eased to 123.08 yen from a 2 1/2-month high of 123.60 set on Monday.

The euro ticked up to $1.0761 from Friday’s 6-1/2-month low of $1.07045.

Still, the euro remains vulnerable as Portuguese government bond yields hit a four-month high and shares fell after leftist parties reached agreement on forming an alternative government to try to oust the centre-right.

Prime Minister Pedro Passos Coelho acknowledged his government could fall before the vote on its legislative programme on Tuesday or Wednesday.

Elsewhere a firmer dollar put pressure on precious metals.

Gold stood at $1,093 per ounce, near its three-month low of $1,085.50 while silver dropped to one-month low of $14.48 per ounce on Monday

Copper fell to a six-week low of $4,953 per tonne, hit also by concerns about demand from China.

Oil prices extended losses for a fourth straight day on Monday on fresh builds at the delivery point for U.S. crude futures

The front-month in Brent crude futures last traded at $47.30 a barrel, having slipped more than 7 percent from last week’s high.

  1. K
    kushal kumar
    Nov 11, 2015 at 9:21 am
    The ongoing turmoil in global economy is understood to have been caused by many factors , falling oil prices in international market being one such factor. This Vedic astrology writer had , as early as last year on 2 June 2014, predicted that global economy is likely to have stressful time from November 2014 to about mid -2016. Keeping in view the varying degree of stress during the said predicted time, three divisions were highlighted as follows : (1). Global economy would likely to p through a mild slowdown from November 2014 to about April 2015. (2). The stress may be intense during May 2015 to October 2015. It was said that : “ discernible concerns would surface. Definite rumbles of distress would be heard”. (3). The stress may likely be causing deep concern if not critical during November 2015 to about mid- 2016. Briefly speaking, one or more of these - natural calamities , energy resources including oil and wrong decisions of the rulers may be some of major causes for the stress. These predictions were made in article – Stressful times ahead for world economy in 2015 and 2016- published online at astrologyweekly on 2 June 2014. It may however, be observed here that astrological predictions made in advance are indicative of likely trends or environment and are not synonymous with determinism because an appropriate and sufficient strategy has a potential to either reduce the gravity of outcome or in some cases may even frustrate such impacts. That could be usefulness.
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