Tuesday, 27 December 2016

Asia stocks mostly higher, dollar claws back some losses

Asian stocks were mostly higher on Tuesday, in thin trade and with little to guide them as most major markets were closed on Monday for Christmas holidays, while the dollar reclaimed its losses from Monday.

Financial spreadbetter IG Markets is predicting a flat start for Germany's DAX .GDAXI and France's CAC 40 .FCHI, with Britain closed for a holiday in lieu of Christmas.

MSCI's broadest index of Asia-Pacific shares outside Japan was marginally higher, with Australia, New Zealand and Hong Kong closed.

Japan's Nikkei .N225 closed little changed.

"It is the time of the year when markets trade with hushed tones," Jingyi Pan, market strategist at IG, wrote in a note. "The magnitude of moves could remain capped with thin market trades expected to remain the case."

China's CSI 300 index .CSI300 was down 0.1 percent and the Shanghai Composite .SSEC slipped almost 0.2 percent, despite positive data released on Tuesday.

The mainland's industrial sector profit rose 14.5 percent in November from a year earlier, suggesting the economy was improving, but policymakers noted growth was too dependent on a rebound in the prices for oil products and iron and steel.

Southeast Asian stocks were up, with markets including Indonesia  and the Philippines  posting gains of as much as 1 percent.

On Friday, Wall Street closed slightly higher in thin trade.

The 10-year U.S. Treasury yield extended gains by almost 1 percent on Tuesday, more than recovering Monday's losses.

The previous session's declines came after data on Friday showed U.S. consumer spending increased modestly in November as household income failed to rise for the first time in nine months. The data suggested the economy slowed in the fourth quarter after growing briskly in the prior period.

Still the slowdown in growth is likely to be temporary, with the labour market near full employment, house prices rising and the stock market rallying close to record highs. Consumer confidence, in addition, is at its highest level since July 2007.

European stocks were little changed on Friday, although banks rose after Deutsche Bank (DBKGn.DE) and Credit Suisse (CSGN.S) settled investigations into U.S. mortgage securities sales, while Italy's government approved a bailout for Monte dei Paschi bank.

"Shares are overbought and due for a bit of profit-taking but moves toward a resolution of bank woes are helping in Europe, global economic data is mostly good and the period around Christmas/New Year is normally positive for shares," Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

The bounce in U.S. yields boosted the dollar, which also recovered Monday's losses with a 0.2 percent gain to 117.37 yen on Tuesday.

The yen retreated after data on Tuesday showed Japan's ion's core consumer prices posted the ninth straight month of annual declines in November, and household spending fell.

The dollar index .DXY, which tracks the greenback against a basket of six global peers, was little changed at 103.01, about 0.6 percent below the highest level since December 2002 hit a week ago.

The euro EUR=EBS was steady at $1.0449 on Tuesday.

In commodities, oil prices were steady, as markets took a wait-and-see approach to output cuts by both OPEC and non-OPEC producers that are due to start in less than a week.

U.S. crude added 0.1 percent to $53.10 a barrel. Global benchmark Brent slipped 0.1 percent to $55.10.

Spot gold XAU= rose 0.5 percent to $1,139.42 an ounce, although the stronger dollar capped gains.

Reference: Nichola Saminather

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