Sydney: Asian shares eased on Monday, lead by a 0.8% drop on the Seoul market as tensions heightened on the Korean peninsula, but firm commodity prices underpinned appetite for mining stocks like BHP Billiton.
Investors also gave the euro a wide berth after last week’s massive five-notch credit rating downgrade of Ireland by Moody’s and as euro zone leaders failed to reassure markets on how they will tackle the debt crisis in the short term.
However, trading was light as the year-end holidays loomed, with investors reluctant to do much, having taken some profits recently when Asian stocks hit 2-1/2 year highs.
“People have already put the cue in the rack this year,” said Ben Potter, research analyst at IG Markets.
Asia Pacific stocks, as measured by MSCI was 0.1% lower, while the index excluding Japan eased 0.2%.
Japan’s Nikkei shed 0.3% and South Korea’s KOSPI fell 0.8%, but Australia’s S&P/ASX 200 index nudged up 0.1%, thanks to gains in the miners.
BHP Billiton and fellow global miner Rio Tinto were both up around 0.5% as copper climbed almost 2% to $9,233 a tonne, within easy reach of a record high $9,267.50 set last week.
Analysts generally expect strong growth in emerging economies to keep commodities in demand next year. JPMorgan forecasts a 17% return for the S&P commodities index, or the GSCI , over the next 12 months.
The euro plumbed a two-week low at $1.3125 and looked set to test support at $1.3100-3090 , while the dollar edged up 0.1% versus a basket of major currencies.
“The dollar is generally supported this morning by tensions in the Korean peninsula and concerns over European debt problems,” said Tsutomu Soma, senior manager at Okasan Securities.
“The euro has been under pressure, especially since the downgrading of Ireland last week. ... Selling pressure could increase should the euro break $1.3.”
Despite the mildly negative start to the week, MSCI’s Asia Pacific stock index is still up some 11% so far this year, compared with a rise of around 8% for the MSCI world equity index .
“Equities are set to post double digit returns in 2011 driven by strong growth and continued risk premia compression,” predicted JPMorgan analysts.
“Together with rising fears of inflation and the lack of safety in public-sector debt, the probability is rising that end investors will again turn to equities as the mainstay of their long-term investments.”