Asian markets slip after US data, Wall St loss

Asian markets fell on profit-taking on Thursday and following a loss on Wall Street as US data showed the economy shrank in the final three months of last year.

However, despite the surprise news out of Washington the dollar managed to hold its own against the yen after suffering a slight fall in New York trade.

Tokyo fell 0.50 per cent, Hong Kong shed 0.10 per cent, Sydney lost 0.44 per cent and Seoul slipped 0.36 per cent while Shanghai was flat.

The losses also capped a strong month for most of the region’s indexes as dealers grow more confident in the global outlook, with Sydney enjoying its best January since 1994.

Investors were left surprised by news from the US Commerce Department that the world’s biggest economy shrank at an annual rate of 0.1 per cent in the October-December quarter. Forecasts had been for a 1.0 per cent rise.

However, the Federal Reserve, wrapping up a two-day policy meeting, dismissed the contraction as “transitory”, noting the economy had “paused” in recent months.

The Fed stayed the course on its ultra-loose monetary policy as expected, saying growth should be moderate moving ahead.

On Wall Street the Dow, which ended Tuesday just short of its all-time high, fell 0.32 per cent, while the S&P 500 shed 0.39 per cent and the Nasdaq slipped 0.35 per cent.

However, SMBC Nikko Securities general manager of equities Hiroichi Nishi told Dow Jones Newswires: “The numbers will likely be treated as a bit of a one-off, as they masked stronger consumer and business spending and progress in the housing recovery.”

On currency markets the dollar slipped slightly in New York but dug its heels in Thursday.

The greenback bought 90.97 yen in early Asian trade, from 91.05 yen late Wednesday in New York. But the US unit is down from the 91.40 seen earlier Wednesday.

The euro was at 123.40 yen and $1.3570 against 123.54 yen and $1.3564.

In Japan the government released figures showing factory production rose 2.5 per cent month on month.

Despite coming up short of expectations of a 4.0 per cent rise the economy ministry said the data indicated “industrial production shows signs of having bottomed out”.

Oil prices rose, with New York’s main contract, light sweet crude for delivery in March increasing three cents to US$97.97 a barrel and Brent North Sea crude for March delivery gaining 10 cents to US$115.00.

Gold was at US$1,677.20 at 0215 GMT compared with US$1,666.55 late Wednesday.