Singapore: The dollar stayed under pressure and Asian share markets stalled near recent peaks on 17 July amid concerns that problems in the US subprime mortgage market could spread to other parts of the world’s largest economy.
Crude oil nudged higher, shrugging off gasoline’s more than 4% slump a day ago, and gold rebounded with dealers expecting a weaker US currency to spur buying.
Optimism about earnings at multinational companies pushed the Dow Jones industrial average to nearly 14,000 but the broader US market fell on Monday 16 July, hit by fresh worries about troubles in the subprime mortgage sector
The benchmark ABX index, used by investors to hedge subprime mortgage risks, sank to a fresh intraday low on 16 July, prompting investors to buy less risky government debt.
Japanese government bonds followed Treasuries higher on Tuesday 17 July. Tokyo’s Nikkei average was down 0.3% at 18,193.25 by the mid-session, while the broader TOPIX index shed 0.5% to 1,774.93.
A slightly firmer yen hit exporters such as Toyota Motor Corp. while shares of insurance companies were sold as investors worried their earnings would be hurt by an increase in payouts due to an earthquake in northwestern Japan on Monday.
Tokyo Electric Power Co. (TEPCO) lost 0.8% after it shut down three major generators at the world’s biggest nuclear power plant following the strong earthquake.
Australian shares nudged lower sa investors booked profit in recent advancers such as Alumina Ltd., though a rebound in Rio Tinto Ltd. capped losses. Rio Tinto had fallen on concerns it was paying a full price for its $38 billion bid for Canadian aluminium firm Alcan Inc.
Paladin Resources jumped 5.7% after a local paper said Cameco Corp., the world’s top uranium supplier, may be planning a takeover bid of the uranium miner.
Hong Kong and Singapore stock markets were marginally higher, and South Korea’s market was closed for a public holiday.
The dollar traded around a record low against the euro and hovered near its weakest level in more than 20 years versus sterling and the New Zealand dollar.
“The market wants to see exactly what impact the recent problems in the subprime market will have on the rest of the economy.”
The yen also stayed weak as investors used the low-yielding currency to buy assets in currencies with higher yields on the view that the Bank of Japan will raise rates very slowly even as the market expects a lift to 0.75% next month.
The dollar was flat at 121.90 yen having recovered from a one-month low of 120.99 yen hit last week.
The euro was little changed at $1.3775 near a record high of $1.3815 hit on Friday on electronic trading platform EBS.
Traders sold the dollar against higher-yielding currencies.
Investors are eyeing US inflation data and Federal Reserve Chairman Ben Bernanke’s testimony to Congress and the Senate this week for a further steer on the US monetary policy outlook.