Asian stock markets fall after Wall Street rally stalls

SINGAPORE: Asian stocks retreated in subdued trade on Friday after Wall Street took a breather from its surge since the US election, while the dollar hovered below the 14-year high set earlier this week.
European markets look set to open flat to slightly lower, with financial spreadbetter IG Markets expecting Britain’s FTSE 100 to open down 0.1 per cent on a shortened trading day, and Germany’s DAX and France’s CAC 40 to start the day little changed.
MSCI’s broadest index of Asia-Pacific shares outside Japan , fell 0.4 per cent to a five-month low. It was heading for a drop of 1.8 per cent in its second consecutive week of declines.
China’s CSI 300 index dropped 0.7 per cent, dragged lower by brokerage and insurance shares, on expectations regulators will tighten supervision over online insurance products. The index was on track to lose 1.1 per cent for the week.
Hong Kong’s Hang Seng retreated 0.5 per cent, and was poised for a similar weekly loss.
Japan’s Nikkei, closed for a holiday on Friday, edged up 0.1 per cent for the week. The index has posted seven straight weeks of gains, its longest winning streak since early 2013, boosted by the yen’s weakness in the face of a surging dollar. Overnight, US equities posted their first back-to-back daily declines of the month in light trading ahead of the Christmas weekend. US indices fell as much as 0.4 per cent on Thursday.
“Santa has taken a leave of absence into the end of the week,” Jingyi Pan, market strategist at IG in Singapore, wrote in a note. “Asian indices could remain depressed into the end of the year.”
Wall Street stocks have been on a tear since the US election on expectations that Donald Trump’s promised fiscal stimulus will boost economic growth and company profits. The Dow Jones Industrial Average has surged 8.7 per cent since before the election results were announced.
Markets globally appeared be on pause for the holidays, with the MSCI World index down 0.1 per cent on Thursday, and little changed on Friday.
Europe’s STOXX 600 index closed down 0.2 per cent on Thursday, with the broader downtrend offsetting expectations of a government bailout for troubled Italian lender Monte dei Paschi di Siena, which closed at a record low on Thursday.
In the foreign exchange markets, the dollar was subdued, having scaled its highest point since December 2002 on Tuesday. It has since hovered below that level, with traders unwilling to make any big moves ahead of the holiday weekend.
The dollar index, which tracks the greenback against a basket of six global peers, slipped 0.1 per cent to 102.98, down from Tuesday’s 103.65 peak. It is poised to end the week flat. The dollar inched down 0.2 per cent against the yen to 117.355, and was on track for a 0.55 per cent loss for the week.
Still, most traders retain positive bets on the US currency, particularly after upbeat economic data including business spending, and an upward revision to third-quarter economic growth on Thursday.
“The trend is definitely for a stronger dollar,” Stephen Casey, senior currency trader at Cambridge Global Payments in New York. “Any dip in the dollar will a buying opportunity.” The euro edged up 0.2 per cent to $1.0453 on Friday, on track for a flat end to the week. Sterling was little changed at $1.229, on track for a weekly slide of 1.6 per cent.
The muted investor sentiment weighed on the Australian dollar, which dropped 0.1 per cent to $0.7207, fractionally above a seven-month low touched on Thursday and repeated on Friday.
Oil prices slipped as investors took profits after Thursday’s gains driven by strong US economic data and optimism that crude producers would keep to their pledge to limit output. US crude pulled back 0.5 per cent to $52.69 a barrel on Friday, but remains on track for a 1.5 per cent gain for the week.
Global benchmark Brent crude fell 0.4 per cent to $54.85, set to close the week 0.7 per cent lower.
As risk appetite ebbed on Friday, the decline in gold prices, which have languished in the wake of the dollar’s rally, reversed. Spot gold climbed 0.3 per cent to $1,131.79 an ounce, shrinking its weekly loss to 0.2 per cent. — Reuters