Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Market / Stock-market-news/  Asian shares start year in slow motion, yen resumes decline
BackBack

Asian shares start year in slow motion, yen resumes decline

Asian shares trading cautiously, Nikkei still shut; China manufacturing index dips to 51, missing forecasts

MSCI’s broadest index of Asia-Pacific shares outside Japan ended last year essentially flat, which was where it was at on Thursday. Korean shares eased 0.3%, as did stocks in Shanghai. Photo: AFP Premium
MSCI’s broadest index of Asia-Pacific shares outside Japan ended last year essentially flat, which was where it was at on Thursday. Korean shares eased 0.3%, as did stocks in Shanghai. Photo: AFP

Sydney: Asian markets got the new year off to a sluggish start as Chinese economic data disappointed ahead of a raft of reports on global manufacturing due out through the session.

The early action was in currencies, where the yen resumed its long decline as investors used it to fund purchases of higher-yielding assets abroad.

The drop in the yen has been viewed as positive for Japanese exports and corporate earnings, and a major reason its share markets outperformed all others last year.

Japan’s Nikkei was closed on Thursday but ended 2013 with an annual gain of 57%. Many analysts look for a further advance this year as the Bank of Japan remains committed to its massive stimulus campaign.

Nomura’s global strategy team is forecasting that Japanese equities will provide the greatest return of all global stocks in 2014, thanks in large part to rising corporate earnings.

They see the Nikkei at 18,000 by the end of this year, up from the current 16,291, and said even 25,000 was possible by 2018 should Prime Minister Shinzo Abe’s aggressive economic program prove successful in defeating deflation.

Asian markets outside of Japan had a much more mixed performance in 2013, partly because investors rediscovered the attractions of assets in Europe and the US.

MSCI’s broadest index of Asia-Pacific shares outside Japan ended last year essentially flat, which was where it was at on Thursday. Korean shares eased 0.3%, as did stocks in Shanghai.

Not helping was a drop in China’s official Purchasing Managers’ Index (PMI) to 51.0 in December, from 51.4 the previous month and below forecasts for 51.2.

Analysts at Barclays noted the pullback of activity in the survey was broad-based across industry sectors and sizes.

“Besides the need for deepening reforms and addressing structural issues such as reducing overcapacity and controlling local government debt, we think elevated interest rates across the money, bond and credit markets have led to higher funding costs, hurt corporate sentiment and thus weigh on economic growth," they wrote in a client note.

They expected China’s central bank to maintain its tightening bias for a while yet.

Better news came from South Korea where manufacturing activity picked up to its strongest level in seven months.

Yen heading lower

A slew of manufacturing indices for Europe and the US are due out across Thursday which will offer a better idea of how global industry was faring into the end of the year.

Markets reacted to the China data by knocking the Australian dollar down a quarter of a US cent. China is Australia’s single biggest export market and the currency is often used as a liquid proxy for risk in the Asian giant.

For other major currencies the main themes continued to be weakness in the yen and resilience in the euro.

The common currency was up at ¥144.97 having clocked up gains of 26% over 2013 to reach a five-year peak of 145.67. The dollar was likewise firm at ¥105.32 having climbed 21% last year.

The euro was a shade softer on the dollar at $1.3763, but still not far from its recent two-year peak of $1.3892.

Dealers suspect the single currency has been supported by the repatriation of funds by European banks and a large and expanding current account surplus in the euro zone.

But there remains a general assumption rising US Treasury yields will eventually lift the dollar up on the euro. Yields on US 10-year paper are up at two-and-a-half year highs of 3.03%. Even shorter-dated rates have been rising as improving US economic data justifies the Federal Reserve’s decision to start tapering its asset-buying stimulus.

Outgoing Fed chairman Ben Bernanke is giving a speech on Friday and may offer more guidance on the outlook for tapering.

In commodity markets, gold recouped a little of its recent losses to stand at $1,211.80 an ounce, though that follows its biggest annual loss in three decades.

US oil Futures were trading 28 cents higher on Thursday at $98.67 a barrel, while Brent added 26 cents to $111.06. Reuters

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 02 Jan 2014, 09:02 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App