Asian shares listless, yen firmer but near lows

SINGAPORE, Feb 19 – Most Asian shares barely moved today as a holiday in the US overnight and a lack of catalysts kept many investors on the sidelines.

Concerns about the euro zone economy, US fiscal talks and Chinese appetite limited gains in commodities and also weighed on the euro.

The dollar’s strength against a basket of currencies also weighed on commodities and capped gains in gold.

“Markets have become top-heavy after rallying through early February on signs of economic recovery in the United States and Europe, and investors now await fresh factors to push prices higher from here,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.

“The broad sentiment is underpinned by a lack of tail risks, but investors are turning to some potentially worrying elements such as Italian elections and US budget talks,” he said.

The MSCI’s broadest index of Asia-Pacific shares outside Japan  was flat after briefly touching a 18½ month high. The index has gained 3.5 per cent this year.

Disappointing earnings pushed European shares lower yesterday for a third straight session while US markets were closed for the President’s Day holiday.

The risk of an inconclusive outcome in Italy’s election this weekend added to concerns while investors kept eyes on Washington where policymakers are discussing a package of budget cuts set to kick in March 1, which analysts warn could hurt the economy.

“We didn’t have a lead from Wall St overnight, we also had weakness coming through from European markets overnight, so we were never expecting a strong day,” said Juliette Saly, stock market analyst at Commonwealth Securities in Sydney.

Australian shares  edged up 0.1 per cent as investors focused on local corporate earnings for direction after a three-month rally that has taken the market to 4-1/2 year highs.

The Nikkei stock average eased 0.2 per cent, after closing up 2.1 per cent yesterday to approach its highest level since September 2008 of 11,498.42 tapped on Feb 6.

Spot gold was up 0.3 per cent at US$1,614.01 (RM5,003.431) an ounce.

London copper inched up 0.3 per cent to US$8,144 a tonne as Monday’s three-week low drew bargain hunting given prospects for a slowly improving global economic recovery. Unease over China’s limp return to the market from a week-long break held back upside momentum, however.

US crude fell 0.3 per cent to US$95.59 a barrel while Brent inched up 0.1 per cent to US$117.48.

The euro was steady around US$1.3344. The currency eased slightly yesterday after European Central Bank President Mario Draghi said in a speech at the European Parliament that “the exchange rate is not a policy target but is important for growth and price stability” and that its rise is “a risk.”


The yen remained near recent lows today, as attention turned to the appointment of a new Bank of Japan governor.

The yen, which has dropped 20 per cent against the dollar since mid-November, fell further at the start of the week after financial leaders from the G20 promised not to devalue their currencies to boost exports and avoided singling out Japan for any direct criticism.

The choice of the next BOJ governor and two deputies has drawn attention as a gauge of how strongly Prime Minister Shinzo Abe is committed to reflating the economy. The G20’s message was that as long as Japan pursues aggressive monetary easing to achieve that goal, a weaker yen as a result of such domestic monetary policy will be tolerated, analysts say.

“But that means that some other economy’s monetary conditions have been tightened,” said Barclays Capital in a note.

“Japan hasn’t even changed its policy stance thus far, and the effect of expectations of a looser setting have led to limited moves in domestic interest rates, but the sell-off of the JPY has been marked and has clearly caused unease in other economies,” the note said.

Market reaction was muted to the release of the minutes of the BOJ’s January 21-22 meeting, when the bank set a 2 per cent inflation target and pledged an open-ended quantitative easing from 2014.

But the yen was bought when Finance Minister Taro Aso told reporters Japan has no plans to buy foreign currency bonds as part of monetary easing, a trader said.

The dollar was down 0.2 per cent to ¥93.73 (RM3.096), but remained near its highest since May 2010 of 94.465 hit on Feb 11.

The euro also eased 0.3 per cent to ¥125.05, below its peak since April 2010 of ¥127.71 touched on February 6. – Reuters



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