Source: AFP
Markets were mixed in Asia on Wednesday after a negative day on Wall Street, as observers warned that the latest rally in stocks may have run out of steam, with investors looking for fresh catalysts to jump-start buying.
The underperformance across the region so far this week comes ahead of key US data releases, including the Federal Reserve’s preferred inflation measure and the upcoming corporate earnings season.
While the central bank last week said it would cut interest rates three times this year, some investors fear that recent indicators and comments from policymakers have called that into question.
Data released on Tuesday on sales of durable goods in February suggested the world’s top economy remained healthy and consumer confidence had risen, albeit less so for the future.
Jobless claims and economic growth readings are due in the coming days, ahead of the crucial personal consumption expenditures (PCE) index on Friday.
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While this is expected to show a slight rebound from January, analysts said this would not spook markets too much, although a big loss to the upside could cause concern.
Earnings announcements begin next month, which could have a major impact on sentiment, as the recent rally in markets is partly based on expectations of future earnings.
“With market valuations high, there is little room for corporate earnings to retreat or for the Federal Reserve to deviate from its expected path of three rate cuts,” said Stephen Innes of SPI Asset Management.
“Any deviation from these expectations could potentially lead to market turmoil.”
All three major indexes on Wall Street closed in the red, having spent most of the day on the positive side of the line.
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In Asian trade, Hong Kong, Shanghai, Seoul, Jakarta and Wellington were down, while Sydney, Singapore, Taipei and Manila were up.
Tokyo rose 1 percent on a weaker yen, which was fueled by comments from Bank of Japan board member Naoki Tamura that officials would continue to pursue an easy money policy for now.
However, he said he wanted to gradually raise borrowing costs as the bank moves away from its multi-year ultra-loose policy.
Keys around 03:00 GMT
Tokyo – Nikkei 225: UP 1.0 percent at 40,804.85 (break)
Hong Kong – Hang Seng Index: DOWN 0.4 percent at 16,556.31
Shanghai Composite: DOWN 0.5 percent at 3,015.31
Dollar/yen: UP to 151.92 yen from 151.53 yen on Tuesday
EUR/USD: DOWN to $1.0826 from $1.0833
GBP/USD: DOWN to $1.2612 from $1.2628
Euro/pound: UP to 85.84 pence from 85.78 pence
West Texas Intermediate: DOWN 0.9% to $80.91 a barrel
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North Sea Brent crude: UP 1.0% to $86.41 a barrel
New York – Dow: UP 0.1 percent at 39,282.33 (close)
London – FTSE 100: UP 0.2 per cent at 7,930.96 (close)
Source: AFP