Asian stocks seen slipping as yen climbs on haven demand

PUBLISHED : Tuesday, 07 February, 2017, 7:36am
UPDATED : Tuesday, 07 February, 2017, 7:36am

Asian equities were poised to decline after the yen led a rally in haven assets with political uncertainty infecting markets across the globe.

Futures on the Nikkei 225 Stock Average signalled the gauge would drop for the first time in three days. That comes after the S&P 500 Index retreated from near-record levels, with shares most tied to economic growth struggling after sagging wage gains and uneven retail results.

The euro slumped with French, Italian and Spanish bonds amid political uncertainty in France. Gold surged to the highest price since November, while 10-year Treasury yields touched a two-week low. The yen strengthened through 112 per dollar.

The Trump-fuelled rally in equities is faltering as investors assess how the US administration will balance protectionist trade rhetoric with promised tax cuts and spending increases. At the same time, traders are assigning greater risk premiums to European countries where anti-establishment movements are gaining traction ahead of elections.

Emerging-market assets advanced as slowing wage growth in the US gives the Federal Reserve room to wait before hiking rates.

“Following the election, the positive shift in sentiment among investors, business, and consumers suggested that the probability of tax cuts and easier regulation was seen to be higher than the probability of meaningful restrictions to trade and immigration,” Goldman Sachs Group economists led by Alec Phillips wrote in a note last week. “One month into the year, the balance of risks is somewhat less positive in our view.”

Hong Kong, mainland China stocks close higher on Beijing pension fund speculation

The Reserve Bank of Australia is forecast to hold its cash-rate target at a record-low 1.5 per cent Tuesday in its first meeting this year.

With a light calendar of US economic data slated for the week, investors will keep an eye on political developments as the Trump administration takes swipes at the judicial branch for suspending its immigration order.

Germany delivers factory data on Tuesday that’s expected to show output slowed in December from the prior month. In the UK, industrial activity also may have moderated, with a report from there due Friday. European banks including Societe Generale SA and UniCredit SpA report this week.

Contracts on the Nikkei 225 Stock Average fell at least 0.6 per cent in Osaka, Singapore and Chicago. Futures on Australia’s S&P/ASX 200 Index. South Korea’s Kospi Index and Hong Kong’s Hang Seng Index each retreated 0.1 per cent.

The S&P 500 fell 0.2 per cent to 2,292.56 in New York, while the Dow Jones Industrial Average slipped 0.1 per cent to 20,052.42.

The yen was little changed at 111.83 per dollar as of 7:38 am Tokyo time Tuesday, after touching a two-month high the previous session. The euro was at US$1.0749 after sliding 0.3 per cent.