Asian markets mixed, as US data miss lowers chances of Fed hike Sep 07, 2016, 08.14 AM
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Japan's Nikkei 225 fell 0.76 percent in early Asian trade, as the yen strengthened against the dollar. A stronger yen is generally seen as negative for Japanese stocks as it makes exports more expensive and reduces overseas earnings when translated back into the home currency.
Asian shares opened mixed on Wednesday, shrugging off Wall Street's higher close on "bad news is good news" as weaker-than-expected US ISM services data lowered the chances the Federal Reserve will hike rates.
Japan's Nikkei 225 fell 0.76 percent in early Asian trade, as the yen strengthened against the dollar. A stronger yen is generally seen as negative for Japanese stocks as it makes exports more expensive and reduces overseas earnings when translated back into the home currency.
The dollar/yen pair fell to 101.33 at 9:35 a.m. HK/SIN time, below the 103 levels it had held for the past three trading sessions. That move came as the dollar weakened amid lower prospects for the Fed to hike interest rates at its September meeting.
"Without the Fed around to support the heavy lifting in September, that is to raise rates, the market is less than convinced that any standard Bank of Japan policy will be effective at this stage.
Look for probes lower" for the dollar/yen pair, wrote Stephen Innes, senior trader at OANDA, in a note. "That said, the BOJ could still make a splash by pulling out some unconventional policy measure, but pressure is certainly mounting for some kind of action," Innes added. Down Under, the S&P/ASX 200 traded higher by 0.39 percent, buoyed by its materials subindex, which was higher by 0.78 percent and financials subindex gaining 0.42 percent, offset by the energy sector falling 1.07 percent.
Chinese mainland markets were higher early trade, with the Shanghai composite up 0.11 percent and the Shenzhen composite gaining 0.2 percent. In Hong Kong, the Hang Seng index was flat. In South Korea, the benchmark Kospi was up 0.15 percent.
In the US on Tuesday, data showed the US Institute for Supply Management (ISM) non-manufacturing purchasers manager index (PMI) index fell to 51.4 last month from 55.5 in July. While levels above 50 still indicate expansion, it was the lowest reading since February 2010.
The miss, along with Friday's disappointing nonfarm payroll data, likely spurred traders to step away from expectations of a September Fed hike. "The [ISM] number is a serious miss and all but wipes out the chance of a Fed rate hike in September. If data continues to weaken, we will see the chances of December rate hike fall sharply as well," Anthony Darvall, chief market strategist at trading platform easyMarkets, said in a Wednesday note.
In the currency market, the dollar fell more than 1 percent against the yen, euro, pound, Australian dollar and other major currencies during the US Tuesday session. The dollar index was trading at 94.899 in early Asian trade, down from levels over 96 last week.
The Australian dollar was trading at $0.7666 during Asian trade, up from levels under $0.75 last week, getting a boost from waning expectations for a September Fed hike and after the Reserve Bank of Australia on Tuesday kept interest rates on hold. Analysts parsing the RBA statement noted that the central bank appeared to be signaling concerns that further rate cuts might overheat the housing market.
Australia's gross domestic product (GDP) for the second quarter rose 0.5 percent on-quarter, just a smidgen below expectations of 0.6 percent growth from a Reuters poll, data released Wednesday showed.
In Japan, internet company Rakuten's shares rose 6.83 percent after the announcement it would be included in the Nikkei Average, Reuters reported. South Korea's Hanjin Shipping won a US judge order extending bankruptcy protections so its vessels can dock at US ports without fear of creditors trying to seize the ships,
. The troubled container shipper saw shares gain 10.07 percent, extending Tuesday's 29.91 percent surge. US crude oil futures traded lower by 0.27 percent at $44.71 a barrel, while Brent futures shed 0.13 percent to $47.20, on receding hopes of an agreement between Saudi Arabia and Russia to freeze output.
Markets were watching for China's August foreign exchange reserves, Malaysia's central bank rate decision and the US Fed Beige Book. "We think that Bank Negara Malaysia's meeting this time may be a close call between a 25 bps rate cut and a policy hold," said Cynthia Jane Kalasopatan from Singapore Treasury Division at MIzuho Bank, in a Wednesday note.
"In the event the central bank decides to maintain policy rate at 3.00% at this policy meeting, it will be a matter of time before further easing," she said.
US markets had initially turned lower shortly after the ISM data was released, but managed to rise again as the odds of a September rate hike were lowered. The Dow Jones industrial average ended up 0.25 percent, the S&P 500 closed up 0.3 percent and the Nasdaq closed up 0.5 percent, posting a new all-time high at 5,275.91.
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Japan's Nikkei 225 fell 0.76 percent in early Asian trade, as the yen strengthened against the dollar. A stronger yen is generally seen as negative for Japanese stocks as it makes exports more expensive and reduces overseas earnings when translated back into the home currency.
Asian shares opened mixed on Wednesday, shrugging off Wall Street's higher close on "bad news is good news" as weaker-than-expected US ISM services data lowered the chances the Federal Reserve will hike rates.
Japan's Nikkei 225 fell 0.76 percent in early Asian trade, as the yen strengthened against the dollar. A stronger yen is generally seen as negative for Japanese stocks as it makes exports more expensive and reduces overseas earnings when translated back into the home currency.
The dollar/yen pair fell to 101.33 at 9:35 a.m. HK/SIN time, below the 103 levels it had held for the past three trading sessions. That move came as the dollar weakened amid lower prospects for the Fed to hike interest rates at its September meeting.
"Without the Fed around to support the heavy lifting in September, that is to raise rates, the market is less than convinced that any standard Bank of Japan policy will be effective at this stage.
Look for probes lower" for the dollar/yen pair, wrote Stephen Innes, senior trader at OANDA, in a note. "That said, the BOJ could still make a splash by pulling out some unconventional policy measure, but pressure is certainly mounting for some kind of action," Innes added. Down Under, the S&P/ASX 200 traded higher by 0.39 percent, buoyed by its materials subindex, which was higher by 0.78 percent and financials subindex gaining 0.42 percent, offset by the energy sector falling 1.07 percent.
Chinese mainland markets were higher early trade, with the Shanghai composite up 0.11 percent and the Shenzhen composite gaining 0.2 percent. In Hong Kong, the Hang Seng index was flat. In South Korea, the benchmark Kospi was up 0.15 percent.
In the US on Tuesday, data showed the US Institute for Supply Management (ISM) non-manufacturing purchasers manager index (PMI) index fell to 51.4 last month from 55.5 in July. While levels above 50 still indicate expansion, it was the lowest reading since February 2010.
The miss, along with Friday's disappointing nonfarm payroll data, likely spurred traders to step away from expectations of a September Fed hike. "The [ISM] number is a serious miss and all but wipes out the chance of a Fed rate hike in September. If data continues to weaken, we will see the chances of December rate hike fall sharply as well," Anthony Darvall, chief market strategist at trading platform easyMarkets, said in a Wednesday note.
In the currency market, the dollar fell more than 1 percent against the yen, euro, pound, Australian dollar and other major currencies during the US Tuesday session. The dollar index was trading at 94.899 in early Asian trade, down from levels over 96 last week.
The Australian dollar was trading at $0.7666 during Asian trade, up from levels under $0.75 last week, getting a boost from waning expectations for a September Fed hike and after the Reserve Bank of Australia on Tuesday kept interest rates on hold. Analysts parsing the RBA statement noted that the central bank appeared to be signaling concerns that further rate cuts might overheat the housing market.
Australia's gross domestic product (GDP) for the second quarter rose 0.5 percent on-quarter, just a smidgen below expectations of 0.6 percent growth from a Reuters poll, data released Wednesday showed.
In Japan, internet company Rakuten's shares rose 6.83 percent after the announcement it would be included in the Nikkei Average, Reuters reported. South Korea's Hanjin Shipping won a US judge order extending bankruptcy protections so its vessels can dock at US ports without fear of creditors trying to seize the ships,
. The troubled container shipper saw shares gain 10.07 percent, extending Tuesday's 29.91 percent surge. US crude oil futures traded lower by 0.27 percent at $44.71 a barrel, while Brent futures shed 0.13 percent to $47.20, on receding hopes of an agreement between Saudi Arabia and Russia to freeze output.
Markets were watching for China's August foreign exchange reserves, Malaysia's central bank rate decision and the US Fed Beige Book. "We think that Bank Negara Malaysia's meeting this time may be a close call between a 25 bps rate cut and a policy hold," said Cynthia Jane Kalasopatan from Singapore Treasury Division at MIzuho Bank, in a Wednesday note.
"In the event the central bank decides to maintain policy rate at 3.00% at this policy meeting, it will be a matter of time before further easing," she said.
US markets had initially turned lower shortly after the ISM data was released, but managed to rise again as the odds of a September rate hike were lowered. The Dow Jones industrial average ended up 0.25 percent, the S&P 500 closed up 0.3 percent and the Nasdaq closed up 0.5 percent, posting a new all-time high at 5,275.91.
