Thursday, 27 October 2016

Asia shares extend losses, dollar off highs

Asian shares extended losses on Thursday after disappointing earnings from technology giant Apple dragged on Wall Street, while the dollar remained shy of this week's nearly nine-month highs.

MSCI's broadest index of Asia-Pacific shares outside Japan  was down 0.9 percent in afternoon trade.

Adding to the already subdued mood, data showed profit growth in China's industrial firms slowed last month from the previous month's rapid pace as several sectors showed weak activity, suggesting the world's second-biggest economy remains underpowered.

"Although industrial profits have gone back on track with more stable growth, unfavouring factors still exist," He Ping, a NBS official said in a note accompanying the data, noting weak market demand from both home and aboard, and fast-rising receivables that weigh on firms' cash flow.

The Hang Seng index .HSI fell 1.2 percent, while the China Enterprises Index .HSCE lost 1.6 percent.

Besides Apple (AAPL.O), results and forecasts from some other major U.S. companies also weighed on U.S. markets overnight. The S&P 500 .SPX and the Nasdaq Composite .IXIC both skidded, though a standout performance by Boeing (BA.N) lifted the Dow Jones industrial average .DJI.

Tokyo's Nikkei stock index .N225 percent slumped 0.5 percent, though a weaker yen underpinned shares.

"Market participants welcome recent yen weakness, and this supports Tokyo stock prices today," said Hiroki Allen, chief representative of Superfund Japan in Tokyo.

"Investors appear to be taking profits in the afternoon, selling stocks that have risen in recent days," he said.

Later on Thursday, market participants will parse the latest data on U.S. durable goods, jobless claims and pending home sales.

"These reports are not expected to have a dramatic impact on the dollar but with USD/JPY eyeing 105, stronger reports could give the pair the push that it needs to make a run for this key level," wrote Kathy Lien, managing director at BK Asset Management.

The dollar edged down 0.1 percent to 104.41 yen JPY=, moving away from this week's high of 104.87 yen touched on Tuesday, its highest level since late July.

The euro inched down slightly to $1.0901 EUR=, while the dollar index stood at 98.675 .DXY, within sight of Tuesday's nearly nine-month high of 99.119.

Expectations for a year-end rate hike by the Federal Reserve remained intact, and have bolstered the greenback. In recent weeks, market participants have been pricing in more than a 70 percent chance that the U.S. central bank would hike interest rates in December, according to CME Group's FedWatch program.

U.S. growth figures scheduled for release on Friday could reinforce or temper Fed hike expectations.

Crude oil futures nursed losses after settling down more than 1 percent on Wednesday even after a surprise drawdown in U.S. crude inventories, as traders remained cautious that OPEC would be able to cut production come late November. [O/R]

U.S. crude CLc1 edged up 0.1 percent to $49.23 a barrel, while Brent crude LCOc1 added 0.1 percent to $50.05.


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