Dollar firm, shares ease in Asia as Fed hike looms

SYDNEY - The dollar held broad gains on Friday as the risk of an imminent US interest rate hike slugged sovereign bonds and commodities, even managing to sour Wall Street's party as the reality of rising borrowing costs began to sink in.

Asian stock markets were mostly lower, with MSCI's broadest index of Asia-Pacific shares outside Japan off 0.4 percent and Australia down 1 percent.

Japan's Nikkei eased just a fraction, with a weaker yen helping limit the losses.

A chorus line of Fed officials singing of the need for higher rates has seen the implied probability of a move this month shoot to 74 percent, from just 30 percent at the start of the week.

Fed Chair Janet Yellen and Vice Chair Stanley Fischer are both due to speak later on Friday and are expected to stick to the same tune.

"The US dollar has been snapped up across the board as a March Fed hike is heavily priced in," said Sean Callow, a senior currency strategist at Westpac.

"All it took was about a hundred comments from Fed officials, but markets have finally decided that "fairly soon" means less than two weeks and that perhaps 3 hikes this year means 3 hikes this year."

That was enough to make even Wall Street pause, and the Dow fell 0.53 percent, while the S&P 500 lost 0.59 percent and the Nasdaq 0.73 percent.

Caterpillar was among the biggest casualties, shedding 4.2 percent on news that federal law enforcement officials searched its Illinois facilities.

The prospect of a Fed hike on March 15 saw yields on two-year Treasury notes shatter their recent range to reach ground last trod in mid-2009.

With the European Central Bank still acting to suppress short-term euro rates, the spread between US and German two-year yields yawned out to 214 basis points, the widest since early 2000 and up from a low of 183 in January.

That shoved the euro down to $1.0505 and set up a test of major support at the February low of $1.0492. The dollar likewise climbed to 114.37 yen and nearer to the recent peak of 114.95.

Against a basket of six major currencies, the dollar was firm at 102.130 after touching its highest since Jan. 11.

That strength was not good news for commodities priced in dollars with everything from gold to copper taking a hit.

Gold was down at $1,232.61 an ounce after suffering its biggest one-day decline since December.

Oil prices took an extra blow after Russian crude production remained unchanged in February, showing weak compliance with a global deal to curb supply to tighten the oversupplied market.

Early Friday, US crude was up 6 cents at $52.67, having shed more than 2 percent on Thursday, while Brent was yet to trade at $55.08 per barrel.

source: news.abs-cbn.com

Asian stocks seen weak on US cues

HONG KONG - Asian stocks look set to edge lower for a second day on Monday as weak cues from US share markets and declining European government bond yields on political worries push investors to take profits after a recent rally.

Markets are holding in recent broad trading ranges, and interest is turning to US President Donald Trump's policy speech to a joint session of Congress on Tuesday night where he is expected to provide clues on his plans to cut taxes.

"With the market getting impatient with Trump's proposed stimulus spending program, the rising political uncertainty around the globe is getting the bulk of the market's attention," ANZ strategists wrote in a morning note.

MSCI's broadest index of Asia-Pacific shares outside Japan eased slightly in early trade, with early Asian stock markets treading water. The index fell 0.7 percent on Friday, but is still up more than 11 percent since end-December.

US stocks clawed their way to a higher close on Friday, with major indices spending much of the trading session in negative territory.

In currencies, the dollar scored some early gains against the Japanese yen with the pair rising to 112.21 as a decline in European bond yields burnished the relative appeal of US debt among Japanese investors.

Sovereign bond yields fell on Friday on a renewed flight to safety bid thanks to weak stock markets and a looming election in France that poses a key political risk for markets.

Investors fear far-right National Front leader Marine Le Pen might win the presidential election this year and lead France out of the euro zone. Polls show Le Pen losing to either centrist Emmanuel Macron or right-wing Francois Fillon, but few people are willing to count her out.

Ten-year German bond yields have dropped nearly 30 basis points so far this month, far outpacing a 13 basis point decline in yields of comparable US debt.

Brent crude edged higher to $56.04 per barrel while US West Texas Intermediate was broadly flat at $54 a barrel.

source: news.abs-cbn.com

Most Asia stocks slide on Fed officials' rate comments, dollar firms

SINGAPORE - Most Asian share markets tumbled on Monday while the U.S. dollar added to gains made after Federal Reserve Chair Janet Yellen indicated a U.S. interest rate increase remains on the cards for this year.

European markets also looked set for a weak start, with financial spread betters expecting Germany's DAX to open down 0.7 percent, and the blue-chip Euro Stoxx 50 to begin the day 0.6 percent lower. British markets are closed for a holiday.

MSCI's broadest index of Asia-Pacific shares outside Japan extended losses to 1 percent.

Japan's Nikkei bucked the trend, closing 2.3 percent higher, the biggest one-day gain in three weeks, as the yen weakened against the resurgent dollar.

China's CSI 300 index and the Shanghai Composite slipped 0.2 percent. Hong Kong's Hang Seng shed 0.4 percent.

The case for a U.S. rate hike has strengthened in recent months, with a lot of new jobs being created, and economic growth looks likely to continue at a moderate pace, Yellen said in a speech at the Fed's annual monetary policy conference in Jackson Hole, Wyoming, on Friday.

While Yellen did not give guidance on what the central bank needs to see before raising rates, she said the Fed already thinks it is close to meeting its goals of maximum employment and stable prices. She described consumer spending as "solid" but noted that U.S. business investment was weak and exports hurt by a strong dollar.

Comments by the Fed's No. 2 policymaker, Vice Chair Stanley Fischer, following Yellen's speech also bolstered the case for a hike this year.

Asked on CNBC whether a rate hike in September and more than one policy tightening before year-end should be expected, Fischer said Yellen's comments were "consistent with answering yes" to both questions, albeit still data-dependent.

Among the first data to be scrutinized will be U.S. consumer confidence for August, due on Tuesday; productivity, manufacturing and construction figures on Thursday; and August non-farm payrolls data rounding out the week on Friday.

Global factory activity surveys will also be released on Thursday.

Traders have modestly raised expectations for U.S. rate increases this year, but remain cautious.

The odds of a hike in September rose to 33 percent following the comments, from 21 percent on Thursday, according to CME Group's FedWatch tool. Traders were pricing in a 59.1 percent chance of a hike in December, up from 51.8 percent on Thursday.

"While the move toward another Fed rate hike will likely cause bouts of consternation in investment markets I don’t see the same degree of uncertainty that we saw around last year’s Fed rate hike," Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

"It's clear from the Fed's actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blow back to the U.S. economy and of the impact of a rising U.S. dollar in doing some of its work for it."

The comments from Yellen and Fischer dragged Wall Street lower at the close.

But they proved a boon for the U.S. currency, with the dollar index, which tracks the greenback against six global peers, jumping 0.8 percent on Friday. It held steady at 95.552 on Monday.

The dollar rose 0.5 percent to a two-week high of 102.34 yen on Monday. That followed gains of 1.3 percent on Friday, its biggest one-day advance in almost seven weeks.

Japanese household spending and retail sales data for July are due on Tuesday. Investors are seeking some sign that Prime Minister Shinzo Abe's massive stimulus programs are having an effect, after figures on Friday showed a decline in consumer prices by the most in three years in July.

The euro was flat at $1.120 after tumbling 0.8 percent on Friday, its biggest one-day slide since July 15.

In commodities, crude prices retreated on the rally in the dollar and concerns about growing output after exports from Iraq in August exceeded July levels.

Iran also said late last week that it would only cooperate in upcoming producer talks in September if other exporters recognized Tehran's right to regain market share lost during international sanctions that were only lifted in January.

U.S. crude futures dropped 1.5 percent to $46.95.

Global benchmark Brent crude retreated 1.2 percent to $49.31.

The stronger dollar also weighed on gold. Spot gold slipped 0.2 percent to $1,318.10, after earlier touching a five-week low.

source: www.abs-cbnnews.com

PH, Indonesian shares lead regional gains after Fed rate hike

BANGKOK - Most Southeast Asian stock markets gained on Thursday after the U.S. Federal Reserve raised interest rates as expected, with the Philippine key stock index rising nearly two percent and the Indonesian benchmark hitting a near two-week high.

The Philippines' key index rose 1.9 percent while the Jakarta composite index gained 1.2 percent, both hovering at their highest levels since Dec. 7.

Share price weakness in Southeast Asia this year in the wake of fund outflows has mostly reflected the rate hike fears, according to brokers.

"Markets have predictably declined heading into the first Fed hike. This, however, presents an opportunity as we expect Fed-related risks to subside thereafter," said broker Nomura Securities in a report.

"A combination of easing China risks and some domestic catalysts makes for a good opportunity to increase our risk exposure in ASEAN," Nomura said.

Nomura upgraded Indonesia to "overweight", the same as the Philippines and Singapore. It remained "underweight" on Malaysia and Thailand.

The Thai SET index rose marginally while telecoms shares such as Total Access Communication came under selling pressure on concerns the high bidding prices of 4G spectrum licences would hurt earnings.

The Fed hiked interest rates for the first time in nearly a decade on Wednesday, signalling faith that the U.S. economy had largely overcome the wounds of the 2007-2009 financial crisis.

The gains in Southeast Asia were in line with a rally on Wall Street overnight and in early Asian stock markets as investors chose to take the historic hike in U.S. interest rates as a mark of confidence in the world's largest economy.

source: www.abs-cbnnews.com

Philippine shares end 2014 with strong gains

BANGKOK - Most Southeast Asian stock markets edged higher on Monday as domestic institutions bought large caps ahead of year-end but shares in Malaysia's AirAsia plunged after one of the company's aircraft went missing on Sunday.

The Philippine stock index rose 0.62 percent on its last trading day for the year.

It ended the year at a two-week high of 7,230.57, rising 22.8 percent in 2014, among the region's outperformers. That compares with a modest 1.3 percent rise in 2013.

The Philippine stock market will be closed from Dec. 30-Jan.2, reopening on Jan. 5.

Singapore's key Straits Times Index rose 0.3 percent to 3,364.64, extending gains made over the past seven sessions, while the Indonesian key index added 0.2 percent, on track for a third straight rise.

The Thai SET index slightly drifted into negative territory at 1,509.25, after posting modest gains in the morning session.
Broker Maybank Kim Eng Securities projected a trading range of 1,495-1,520 for SET for the day.

"A light trading volume will make the SET Index more volatile. However, window dressing and LTF money will help supporting today's SET Index," it said in a report.

Long-term equity funds (LTF) are more popular towards the end of the year as they receive favourable tax treatment.

About 3.6 billion shares had changed hands on the Thai stock market by midday, compared with a full day volume of 15 billion shares on Friday, stock exchange data showed.

In Kuala Lumpur, AirAsia shares fell 7.8 percent, their biggest one-day drop in more than three years, after Sunday's incident involving the airline's Indonesia unit.

The Bangkok-listed shares of Asia Aviation, the holding company of Thai AirAsia, in which the AirAsia group holds a 45 percent stake, were down 3.6 percent on Monday.

Broker Asia Plus Securities rated Thai Asia Aviation shares 'buy' as it expected no financial impact due to Indonesia's AirAsia incident.

"The share weakness was due to an indirect impact in terms of weak sentiment on Indonesia's AirAsia. We keep our earnings forecast for Thai Asia Aviation," it said.

Among the actively-traded stocks in the region, shares of Singapore DBS Group Holdings climbed 1.1 percent, Thailand's Kasikornbank was up 0.4 percent and Indonesia's Astra International gained 0.7 percent.

source: www.abs-cbnnews.com