Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

GLOBAL MARKETS-Asian shares fall, dollar firms as Fed dampens bets on more rate cuts

Published 2019-07-31, 10:39 p/m
© Reuters.  GLOBAL MARKETS-Asian shares fall, dollar firms as Fed dampens bets on more rate cuts
EUR/USD
-
USD/JPY
-
AUD/USD
-
NZD/USD
-
XAU/USD
-
US500
-
DJI
-
AXJO
-
JP225
-
MS
-
DX
-
GC
-
LCO
-
ESZ24
-
CL
-
IXIC
-
US2YT=X
-
MIAPJ0000PUS
-
CSI300
-
MIWD00000PUS
-
DXY
-

* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* MSCI ex-Japan down 0.4%, Nikkei gives up early losses

* Dollar enjoys broad-based rally against major currencies

* Fed cuts rates by 25 basis points, further cuts not certain

* U.S.-China trade talks end with no progress

By Swati Pandey

SYDNEY, Aug 1 (Reuters) - Asian shares fell to six-week lows on Thursday while the dollar jumped to two-year highs as the U.S. Federal Reserve poured cold water on market expectations of a lengthy easing cycle following a 25 basis-point rate cut.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS faltered 0.4%, extending losses for a fifth day to the lowest since mid-June.

Japan's Nikkei .N225 reversed early losses and were a shade higher, while Australian shares .AXJO declined 0.1%. Chinese shares opened in the red with the blue-chip index .CSI300 down 0.3%.

E-minis for the S&P500 ESc1 clawed back early losses and were marginally higher, after a sharp drop on Wall Street.

Global share markets recoiled overnight after U.S. Federal Reserve Chair Jerome Powell said Wednesday's easing was "not the beginning of a long series of rate cuts".

Powell characterised the rate cut as "a mid-cycle adjustment to policy", citing signs of a global slowdown, simmering U.S. trade tensions and a desire to boost too-low inflation. Markets took that as a sign that sharp further cuts were not imminent. assets such as shares have had a golden run in the past decade as global central banks have kept monetary policies stimulatory, world growth has been strong and corporate profits have surged. But there are now growing worries over how much longer the rally can run as trade disputes drag on the global economy.

The United States and China on Wednesday ended a brief round of trade talks without much progress in ending their year-long tariff war. broader global trade dynamic remains a challenge," Morgan Stanley (NYSE:MS) strategist Michael Zezas said, referring to trade skirmishes between Japan and South Korea and U.S.-Europe negotiations over auto tariffs.

"Trade should continue to drag on corporate confidence, capex and global growth in the near term."

Downbeat data and factory surveys on Thursday pointed to further weakness for Asia's trade-reliant economies.

South Korea's exports tumbled for an eighth straight month in July amid persistently weak global demand and an escalating dispute with Japan, while its new export orders shrank the most in about six years. Korea, the world's sixth-largest exporter, is the first major industrial economy to release trade data each month, providing an early assessment on the health of global demand.

Pressure on Chinese factories eased slightly, but manufacturing activity continued to shrink. the Dow .DJI and the Nasdaq .IXIC lost 1.2% each while the S&P 500 .SPX declined 1.1%. MSCI's gauge of stocks across the globe .MIWD00000PUS slipped to a five-week low. .N

GOLD AND BONDS

Yields on U.S. Treasuries rose as investors scaled back expectations for at least 100 basis points of easing in the near-term. US2YT=RR

Yields on 10-year bonds US10YT=TWEB climbed as high as 2.053% in early Asian hours from a U.S. close of 2.007%.

In foreign exchange, the dollar enjoyed a broad-based rally against major currencies, including the euro and Antipodean currencies on expectations monetary policies in Europe, Australia and New Zealand will remain accommodative.

The dollar index .DXY against a basket of six major currencies finished July 2.5% higher and was last up 0.3% at 98.816. Against the Japanese yen JPY= , the dollar broke above 109 to jump to the highest since end-May.

The common currency EUR= fell to $1.1032, the lowest since May 2017.

The Aussie AUD=D3 slipped below key chart support of $0.6832 to as low as $0.6828, a level not seen since early January when a currency "flash crash" briefly took it to $0.6715.

The kiwi NZD=D3 hit a six-week trough of $0.6535 as markets wager on a rate cut by the Reserve Bank of New Zealand next week.

U.S. crude futures CLc1 fell 82 cents to $57.75 per barrel in the wake of Powell's comments on the rate outlook. Brent was down 97 cents at $64.08. O/R

Spot gold XAU= made a new two-week trough on Thursday after falling to 1,405.50.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Sam Holmes & Kim Coghill)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.