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LONDON, July 9 ― London's FTSE 100 ended in the red yesterday as markets remained subdued on dampened hopes of a hefty rate cut by the US central bank, while tobacco stocks jumped on Imperial Brands' buyback and dividend revision plans. UK…
HONG KONG, July 8 — Asian markets retreated today and the US dollar held gains after a blockbuster US jobs report dashed hopes that the Federal Reserve would slash interest rates this month. Labour Department data showed that despite recent…
ISTANBUL, July 8 — The Turkish lira was 2.1 per cent weaker against the US dollar today after President Tayyip Erdogan dismissed the central bank governor, laying bare differences between them over the timing of interest rate cuts to revive the…
SYDNEY: Asian shares fell on Monday after strong U.S. jobs data tempered expectations for a Fed rate cut, while the Turkish lira hovered near two-week lows on worries about central bank independence.
Share sentiment was also dampened by U.S. investment bank Morgan Stanley’s decision to reduce its exposure to global equities due to misgivings about the ability of policy easings to offset weaker economic data.
Asian shares were broadly weaker on Monday, tracking Wall Street which fell from record highs last week.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost more than 1%, with every market in the red.
Japan’s Nikkei faltered 0.9%. Chinese shares started lower with the blue-chip index off 1.7% and Hong Kong’s Hang Seng index down 1.5%.
South Korea’s KOSPI was off 1.8% and Australian shares slipped about 1% to a five-week low.
“We are lowering our exposure to global equities to the range we consider ‘underweight’,” Morgan Stanley’s London-based strategist Andrew Sheets said in a note. The previous range was ‘neutral’.
Expensive valuations and pressure on earnings were among the reasons for the downgrade, Sheets said, while the bank increased its exposure to emerging markets sovereign credit and safe haven Japanese Government Bonds.
Global equities have generally been bolstered by expectations that central banks will keep interest rates at or near record lows to boost economic growth.
Those expectations were tempered by a U.S. labour report that showed nonfarm payrolls jumped 224,000 in June, beating forecasts for 160,000, in a sign the world’s largest economy still had fire.
Given the strength shown in that data, investors now expect U.S. Federal Reserve chair Jerome Powell to go slow on rate cuts this year.
Bets for aggressive Fed easings are already off, with the market now pricing a 27 basis points easing this month, from 33 basis points prior to payrolls.
Powell will provide further cues on the near-term outlook for monetary policy this week at his semi-annual testimony to the U.S. Congress.
There was some positive news on the protracted China-U.S. trade war with White House Economic advisor Larry Kudlow confirming that top representatives from the United States and China will meet in the coming week for trade talks.
“Whether the negotiators can find a solution to the difficult structural issues that remain between the two sides is another matter, and Kudlow cautioned there was ‘no timeline’ to reach an agreement,” National Australia Bank strategist Rodrigo Catril said.
CURRENCIES AND GEOPOLITICS
In currency markets, action was in the Turkish lira which weakened to 5.8245 per dollar, the lowest since June 25 after Turkey’s central bank governor Murat Cetinkaya, whose four-year term was due to run until 2020, was replaced by his deputy Murat Uysal.
President Tayyip Erdogan sacked Cetinkaya for refusing the government’s repeated demands for rate cuts, raising questions about central bank independence.
The lira pared some of its losses to last hold near 5.7575.
The dollar index, which measures the greenback against a basket of major currencies, was a shade weaker at 97.239 after climbing to a 2-1/2 week top of 97.443 on Friday.
The euro was flat at $1.1226, not far from a 2-1/2-week low of $1.1205 touched on Friday.
The Australian dollar, which has been on an uptrend since June 18, slipped below 70 U.S. cents to last trade at $0.6985.
Geopolitics may be in focus this week following news on Sunday that Iran will boost its uranium enrichment, in breach of a cap set by a landmark 2015 nuclear deal.
“So far U.S.-Iran tensions have not had a material impact on markets, but if tensions escalate it could be a different story,” said NAB’s Catril.
In commodity markets, oil prices rose with Brent crude futures, the international benchmark for oil prices, up 16 cents at $64.39 per barrel while U.S. crude added 22 cents to $57.73.
Spot gold fell 0.1% to $1,398.33 an ounce.
TOKYO, July 8 — The US dollar rose broadly today after strong US jobs growth in June suggested the Federal Reserve will not aggressively cut interest rates later this month. US nonfarm payrolls rebounded in June to 224,000, the most in five…
SYDNEY, July 8 — Asian shares slipped today as investors wagered on a less aggressive policy easing in the United States, while the Turkish lira held near two-week lows after the country's president dismissed its central bank governor over the…
LONDON, June 24 — European stocks stumbled and the dollar hit three-month lows today as hopes waned for progress in Sino-US trade talks at this week’s G20 meeting and fears of an escalation in Iran tensions flared up. Investors are waiting to…
HONG KONG, June 24 — Oil prices extended gains today as rising US-Iran tensions fuelled supply concerns, while Asian equities also edged up ahead of a crunch meeting between Donald Trump and Xi Jinping this week. Both main crude contracts are up…