Asia shares sag on caution, dollar consolidates

28 Sep 2015 | Author: | No comments yet »

Asian shares sag in cautious trade.

TOKYO — Asian stocks sagged on Monday after Wall Street’s uninspiring performance on Friday and ahead of key economic indicators, while the dollar consolidated its gains against the yen and euro.Chinese markets plunged for around half an hour during the morning session on Monday in response to worse-than-expected industrial profitability data but pared its losses by the midsession break.

Spreadbetters forecast shaky sentiment spilling over into European equities, predicting a lower open for Britain’s FTSE, Germany’s DAX and France’s CAC. Mainland industrial enterprises reported aggregate profits plunged 8.8 per cent to 448.1 billion yuan in August from the same period last year, battered by lower selling prices and investments and higher costs, the National Bureau of Statistics said on Monday morning. Tokyo’s Nikkei lost 1.1 percent on caution ahead of coming announcements including Wednesday’s Japan industrial production, Thursday’s China Caixin Purchasing Managers’ Index (PMI) and US non-farm payrolls on Friday. “Investors would not take large positions until they digest the outcomes of these key data, so directionless trading is expected this week and volume is likely to be thin,” said Takuya Takahashi, a strategist at Daiwa Securities in Tokyo. But the impact of falling industrial profits on the market is likely limited, since it’s more driven by rising costs than weakening demand, said Yang Weixiao, an analyst from Founders Securities. “The market absorbed relatively well the poor industrial profit figures and after an initial correction started to rebound. On Friday, the S&P 500 erased an early Federal Reserve-driven rally and closed slightly lower amid a selloff in biotech shares, and the Nasdaq lost 1 percent.

The rebound is most noticeable in the IT sector, which experienced a significant rally,” Gerry Alfonso, a director at Shanghai-based Shenwan Hongyuan Securities, said. “IT stocks have been volatile in recent times and are currently receiving some support from the official visit of the Chinese authorities to the US. Investors saw it as a positive the trip and seem to be reading it as an indication of further economic collaboration between the two countries.” Hong Kong markets are closed today for celebration of the mid-autumn festival. Fed Chair Janet Yellen last week revived prospects of an interest rate hike before year-end, easing concerns about slowing global growth that helped the dollar and risk assets, which have been buffeted by fears over China’s sputtering economy. The dollar fetched ¥120.30 after edging up to a two-week high of 121.24 on Friday as US Treasury yields rose on the strong US GDP numbers and expectations of a Fed hike in 2015.

The China Securities Regulatory Commission said Friday it would go ahead with the proposal to install a circuit-breaker in Shanghai and Shenzhen, having received 4,861 suggestions over the proposed during the consultation process that ended last week. “By and large, market participants have agreed to such an idea. In commodities, the lacklustre mood in equity markets spilled over and US crude oil futures lost 0.8 percent to $45.31 a barrel while Brent crude lost 0.6% to $48.27 a barrel. Prices hit four-week lows on Thursday near the $5,000-mark and are within reach of a six-year low of $4,855 seen last month. “It highlights the increasing cautiousness around China’s growth and what it means for copper despite what the supply side is doing. The PMI will be pretty key this week.” Platinum, drubbed recently on fears demand for the metal used in diesel engines would diminish in the wake of the Volkswagen emissions scandal, dipped 0.1 percent to $942.25 an ounce, edging back towards the 6-1/2-year low of $924.50 an ounce plumbed last week. Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles.

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