Asian markets decline on cautious global outlook
BANGKOK — Most Asian markets drifted lower Monday as cautious investors awaited key U.S. and Japanese data later this week for clues on the global economic outlook.
Asian stock markets would likely hover at current levels for awhile after their huge rally since March, analysts said.
U.S. jobs numbers due Thursday should help investors figure out if their hopes for a recovery in the world’s largest economy are justified. They will also be looking for indications of Japanese business executives’ confidence when the Bank of Japan releases the quarterly “tankan” survey on Wednesday.
And with some investors heading off on summer holidays, trading will likely be thin.
“We’re going to be a bit directionless next couple weeks,” said Andrew Orchard, Asian strategist for Royal Bank of Scotland in Hong Kong. “We could gradually drift higher, but we’re not going see an extreme move in either direction.”
The dollar got a modest lift after Chinese central bank governor Zhou Xiaochuan said over the weekend that there would be no sudden changes in China’s foreign currency reserves.
“Our foreign exchange reserve policy is always quite stable. There will not be any sudden changes,” Zhou said at a conference in Basel, Switzerland, according to the Chinese newspaper National Business Daily.
The dollar rose to 95.46 yen from 95.25 late Friday in New York, while the euro slipped to $1.4024 from $1.4063.
Investors got a dose of positive economic news from Japan, which reported that industrial production jumped 5.9 percent from a month earlier, matching a rise in April that marked the biggest jump in 56 years. But any optimism wore off by afternoon trading, with the Nikkei 225 index dropping 93.92 points, or 1 percent, to 9,783.47.
In Hong Kong, the Hang Seng index was down 0.3 percent at 18,543.86, while Australia’s benchmark sank 0.5 percent to 3,884.7. South Korea’s Kospi slipped 0.4 percent to 1,387.97.
Mainland China’s market was one of the few gainers. The Shanghai Composite index was up 17.83 points, or 0.6 percent, at 2,946.04.
Thursday’s U.S. employment data could give investors a better idea of where the U.S. economy is heading. Though a lagging indicator, the jobless rate should provide valuable insight into whether the economy is stabilizing or rebounding. Economists polled by Thomson Reuters predict it rose to 9.6 percent in June from May’s 9.4 percent, a 25-year high.
“We’ve got figures on employment that could give us direction, but for the most part people are just treading water, waiting for more news,” said Miles Remington, head of Asian sales trading at BNP Paribas Securities in Hong Kong.
Beyond that, U.S. earnings reports and profit outlooks could dictate markets. Some watchers are already worrying that poor earnings results, which start rolling out in early July, could weigh down a market that had been buoyed by hopeful signs of recovery
The holiday-shortened week will mean lower trading volumes. Hong Kong’s market is closed Wednesday for a public holiday, while U.S. markets will be closed Friday to observe Independence Day.
U.S. stock index futures were down, suggesting Wall Street would open lower. Dow futures were down 49 points, or 0.6 percent, to 8,324, while S&P 500 futures were down 5.7 points, or 0.6 percent, to 908.20.
Oil prices slid under $69 a barrel in Asia. Benchmark crude for August delivery slipped 60 cents to $68.56 a barrel by early afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, it fell $1.07 to settle at $69.16.
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