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Asian shares fall on Fed outlook; dollar recovers

Asian shares fall on Fed outlook; dollar recovers
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First Published: Thu, Nov 05 2009. 08 45 PM IST
Updated: Thu, Nov 05 2009. 08 45 PM IST
Hong Kong: Asian shares fell on Thursday, while the dollar recovered most losses made after the US Federal Reserve vowed to keep rates near zero for “an extended period” and saw a sluggish recovery in the world’s biggest economy.
The euro drew profit-taking ahead of a European Central Bank (ECB) meeting later on Thursday. ECB is expected to keep interest rates at a record low, but may give clues on when it will start weaning banks off cheap funds.
The euro fell to $1.48 (Rs69.71) from $1.49 in early European trade.
The pound sterling also slipped before a Bank of England meeting, with policymakers set to decide whether to inject more stimulus into the British economy.
Asian share markets fell as investors gained little encouragement from the Fed, which vowed to maintain a very loose monetary policy in the absence of inflation pressure, and said US economic recovery, though building, would be muted.
The MSCI Index of Asia Pacific stocks traded outside Japan fell less than 1% after bouncing on Wednesday, the most in nearly two months.
All eyes are now on US jobs data due on Friday for more clues on the state of the American economic recovery, analysts said.
“Investors were pushing the market lower, preparing for more selling by investors such as hedge funds in case US jobs data raises a disturbance,” said Tsuyoshi Segawa, an equity strategist at Mizuho Securities Co. Ltd in Tokyo.
Japan’s Nikkei share index slid 1.3% to a one-month closing low.
Shares of exporters were hit by early gains in Asian currencies, though the dollar recovered ground. The US currency was marginally higher against a basket of currencies.
Dealers said the dollar remained vulnerable as the Fed statement did not signal a change in monetary policy.
Toyota Motor Corp. shares, however, could be poised to rebound on Friday after the world’s biggest car maker by sales sprung a surprise quarterly profit and slashed its annual loss forecast by more than half.
Toyota shares fell 0.8%, closing before the earnings announcement.
In Seoul, shares tumbled 1.8%, with trade volume hitting a 14-month low. That was despite upbeat economic data, including double-digit department store sales growth and a further rise in exports to China last month.
Hyundai Motor Co. Ltd shares slumped 4.2% after analysts said Korea’s top car maker, which specializes in small- and mid-sized cars, could lose market share in the US.
Chinese shares rose 0.9% to a fresh three-month closing high as signs that economic recovery was picking up steam lifted sentiment, while Hong Kong dropped 0.6% on profit-taking.
Australia, Taiwan and Singapore also saw losses of less than 1%.
India went against the regional tide with a 1% rise on bargain hunting in choppy trade that saw its main stock index fall more than 2% before recovering.
Asian currencies were mixed. Indonesia’s central bank intervened to support the rupiah as investors took profits on a recent rally.
Thailand’s central bank governor Tarisa Watanagase, in an interview with Reuters, said she was not worried about appreciation of the Thai baht, which is up 4% this year, saying it remained competitive for trade.
In New Zealand, the kiwi dollar fell after weak job data there and the central bank said economic recovery was more vulnerable than in Australia, and the jobless rate hit a nine-year high.
“New Zealand has had a recession, and the pickup is slower and more vulnerable—a difference financial markets do not appear to appreciate,” Reserve Bank of New Zealand governor Alan Bollard said in notes prepared for a business group.
The kiwi fell to as low as $0.72, from around $0.73 before Bollard’s comments.
Gold, buoyed this week by India’s 200-tonne purchase from the International Monetary Fund, retreated a bit from its fresh record high struck overnight, but remained well in sight of $1,100 an ounce (28.35g).
Weak equity markets pushed oil below $80 after its over $3 gain in the past three days.
Japanese government bond futures fell, tracking a slide in longer-term US treasurys on investor fears of excessive government debt supply after the Fed’s statement and a weak 10-year bond auction.
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First Published: Thu, Nov 05 2009. 08 45 PM IST
More Topics: Markets | Asian stocks | Japan | Nikkei | Kospi |