Asian stocks edge up in thin trade, oil hits fresh low

23 Dec 2015 | Author: | No comments yet »

Asian Stocks Retreat as Yen Weighs on Japan, Toshiba Tumbles.

Asian share markets got off to a lacklustre start on Monday following a dive on Wall Street, though losses were limited by a general lack of investor interest in a holiday-heavy week.Japan’s Nikkei Stock Average fell 1.4%, adding to its 1.9% decline on Friday when the Bank of Japan announced tweaks to its current bond buying program.Asian stocks fell, led by declines in Japanese equities following the yen’s biggest gain in a week and as investors weighed the outlook for the global economy. Analysts said the measures didn’t amount to a clear expansion of the program, and the central bank said the steps were an adjustment rather than an extension.

Weakness from Friday extended in early trading, as optimism around the Fed’s decision Wednesday to raise interest rates for the first time in almost a decade faded. The regional benchmark gauge is down 6.3 percent this year, on course for its first back-to-back annual declines since 2002, as a commodity rout deepened and investors speculated Chinese authorities will need to increase stimulus to support economic growth. Investors are weighing prospects for next year, with recent data doing little to allay concern that global growth remains vulnerable to a slowdown in China and a related rout in commodities. Longer-dated Treasuries have been particularly popular as investors wager the Federal Reserve is well ahead of the curve on inflation after last week’s rate hike.

The global background is also one of disinflation given the weakness in oil and other commodity prices and the mounting spare capacity in major exporters such as China. Governor Haruhiko Kuroda said the changes were designed to make it easier for the BOJ to maintain its current policy and didn’t constitute additional easing. The resulting rally in longer-dated Treasuries has flattened the yield curve with the gap between two-year and 10-year paper shrinking to 123 basis points, the smallest since early February. Furthermore, although Federal Reserve Chair Janet Yellen continues to characterize the U.S. economy as strong, it does appear to be slowing down.” The MSCI Asia Pacific Index fell 0.5 percent as of 11:49 a.m. Toshiba plunged 9.8% after Dow Jones reported over the weekend that people familiar with the matter said the company is likely to post a full year net loss of around ¥500 billion.

A flatter curve is bad news for bank profits since they essentially make money from borrowing short and lending long, and could be one reason U.S. bank stocks fell hard late last week. A Toshiba spokesman, responding to reports about the projected loss in Japanese media, said the number wasn’t something announced by the company and declined to comment further.

In Hong Kong, futures on the Hang Seng and Hang Seng China Enterprises gauges lost at least 0.5 percent, while those on the FTSE China A50 Index were down 0.2 percent. In other currencies, China’s central bank guided the onshore yuan stronger against the U.S. dollar, breaking 10-straight sessions of setting the reference rate weaker. The U.S. equities gauge extended declines in the final 15 minutes of trading and volume soared because of a quarterly event known as quadruple witching, when futures and options contracts on indexes and individual stocks expire.

Shares of Hong Kong-listed Fosun Holdings Ltd. were up 0.2%, even as the flagship of Chinese conglomerate Fosun Group, said Sunday it had withdrawn its bid for London merchant bank BHF Kleinwort Benson. In South Korea, the won advanced 0.4 percent to 1,178.45 a dollar after the nation’s credit rating was increased one level by Moody’s Investors Service, which cited the nation’s “strong and resilient” credit metrics and prudent fiscal stance. In South Korea’s debt market, three-year government bonds rose with the yield declining four basis points to 1.66 percent, the least for a benchmark of that tenor since Nov. 3, Korea Exchange prices show.

Spanish government bonds may open lower on Monday after an indecisive election that left Prime Minister Mariano Rajoy with limited options to forge a governing majority, threatening a period of instability. While Rajoy’s People’s Party placed first in Sunday’s election, earning the right to try and form government, the results suggest the only party able to form a majority with them in the 350-member parliament would be historic rivals, the Socialists.

Brent crude in London extended losses from a seven-year low amid speculation suppliers from the Middle East to the U.S. will exacerbate a record glut as they continue fighting for market share. Producers are focusing on reducing costs amid the price decline, Qatar Energy Minister Mohammed Al Sada said Sunday at a meeting of Arab oil-exporting nations in Cairo.

U.S. natural gas futures rose a second day, climbing 4.3 percent to $1.843 per million British thermal units as forecasts showed cooler weather in the Midwest later this month.

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