Hong Kong: Asian stocks edged up on Monday, holding near a six-month peak struck last week and withstanding an early bout of profit-taking as investors eyed a slew of corporate earnings reports around the world this week.
The higher-yielding Australian dollar fell from a six-month high and commodity prices slipped after the initial drop in stocks, with assets that have gained the most on bets for a gradual global recovery coming under pressure.
The euro slipped to a one-month low against the dollar on uncertainty over what the European Central Bank’s next policy easing steps will be.
Over the weekend, ECB President Jean-Claude Trichet said that the next move would be a quarter-point trim in rates, but other officials have sent mixed signals on what unconventional measures could be adopted.
The ECB has lagged moves by the Federal Reserve, Bank of England and Bank of Japan in making asset purchases on top of cutting interest rates to near zero to revive their recession-hit economies.
“The euro looks set to fall further, following the same path as the dollar, sterling and the yen did when they faced month-long selling after their central banks adopted unconventional measures,” said Kengo Suzuki, a currency strategist at Shinko Securities in Tokyo.
The MSCI index of Asia-Pacific shares outside Japan inched up 0.2% in early trade, getting a boost from gains in Hong Kong and Taiwan.
BOC Hong Kong, the Bank of China’s local subsidiary, jumped more than 5% after China said over the weekend it would allow Hong Kong banks on the mainland to issue yuan-denominated bonds, a move seen helping spur loan growth.
US shares climbed on Friday and the Dow Industrials average scored its strongest six-week run since 1938. But S&P futures were down 0.7% in Asia and were pointing to a weaker start at the opening bell.
US banks will continue to be in focus, with results from Bank of America, Wells Fargo and Bank of New York Mellon among the major ones this week.
President Barack Obama said on Sunday that the US economy remained under strain and his top economic adviser tempered hopes for a speedy recovery that have driven the stock market to successive gains.
Japan’s Nikkei average dipped 0.4% dragged down in part by Toshiba’s 5.4% slide on reports the electronics maker will raise $5 billion in capital - its first share issue in 28 years - to bolster its financial position.
Government bonds in Japan retreated following a decline in US Treasuries on Friday and as the rally in stocks was showing signs of holding up, even as some investors wondered if equities were due for a near-term reversal after the six-week run higher.
Japan’s Ministry of Finance was set to meet with big investors after talks with primary bond dealers on Friday as it eyes how to smooth out the expected surge in bond issuance to pay for the country’s latest stimulus package totalling ($156 billion).
But in New Zealand, five-year swap rates fell about 3 basis points to a one-month low of 4.745% as market players started seeing a bigger chance the country’s central bank could cut interest rates by 50 basis points at a meeting next week.
The New Zealand swaps market has also settled down after rates soared in March as local banks tried to hedge themselves against an expected rush of homeowners resetting mortgages to fixed rates, taking advantage of historically low interest rates.
In currencies, the euro fell 0.3% to $1.3005 and struck a one-month low of $.2967 on trading platform EBS. Against the yen, the dollar dipped 0.3% to ¥98.80.
The dollar index, a gauge of its performance against six major currencies, was little changed at 86.075 after pushing up to a one-month peak on the euro’s drop.
U.S. crude oil prices fell as much as 2 percent to near $49 a barrel on the dollar’s gains, while gold was little changed at $868.25 an ounce (Editing by Kim Coghill) REUTERS