Saturday, March 17, 2012

Asian shares consolidate, Dollar faces profit taking

MSCI Asia ex-Japan steady, Nikkei opens down 0.1%; dollar off highs but steady
Asian shares steadied on Friday and the dollar took a breather after its recent broad rally spurred some profit taking, but a fresh batch of data suggesting the US economy may be picking up momentum underpinned investor sentiment.

The MSCI Asia Pacific ex-Japan index was barely changed and Japan’s Nikkei opened down 0.1% after rising to an 8-month high on Thursday.

The Standard & Poor’s 500 index on Thursday closed above 1,400 for the first time since June 2008, having risen about 11.5% this year without a major pullback. Some analysts have called for a consolidation while others see ongoing momentum.

The FTSEurofirst 300 index of top European shares finished 0.35% higher, and up 10% this year to nearly recover from last year’s 10.7% drop.

“The market is still going through a relief rally more than chasing a new trend on global growth,” Barclays Capital analysts said. “We are getting into profit-taking territory,” they added.

The number of Americans claiming new jobless benefits fell back to a four-year low last week, while the New York Federal Reserve said on Thursday its Empire State general business conditions index rose to its highest since June 2010 last month. The Philadelphia Federal Reserve Bank’s business activity index also showed manufacturing kept growing in the region this month.

“The New York Fed, Philadelphia Fed and the jobless claims data overnight were again favourable, so we can expect to see strong support for markets,” said Yumi Nishimura, senior technical analyst at Daiwa Securities.

The dollar stood at ¥83.40, retreating from a 11-month high of 84.17 touched on Thursday, and also off a two-month high against a basket of major currencies of 80.738 hit the previous day. The US currency steadied against the euro at $1.3080, easing from Thursday’s one-month high of $1.3004.

The US economy shows encouraging signs of early expansion but still faces tough challenges that call for measures to create jobs to help restore fiscal sustainability, US Treasury Secretary Timothy Geithner said on Thursday.

Oil rebounded after a sharp decline on Thursday when Reuters, citing two British sources, reported that Britain decided to cooperate with the United States in an agreement to release oil from government-controlled strategic reserves.

US crude was up 0.4% to $105.50 a barrel on Friday, after settling down 0.3% at $105.11 a barrel. US crude futures fell to a session low of $103.78 on Thursday. Brent crude fell 1.14% to settle at $123.55 a barrel on Thursday.

Asian credit markets were slightly firmer early on Friday, with the spread on the iTraxx Asia ex-Japan investment-grade index narrowing by 2 basis points.

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