Asian share markets are only mildly higher Friday after large falls the previous day, as concerns remain about the U.S. economy and volatility stays high heading into the weekend.

Japan’s Nikkei 225 has gained 2.3% after falling 11.4% on Thursday while Australia’s S&P/ASX 200 is up 1.1% and New Zealand’s NZX-50 2.4% higher; Korea’s Kospi Composite is down 0.1% after dropping 9.4% on Thursday.

The Japanese yen is off its early lows though riskier currencies like the Australian dollar are still getting some interest.

For now at least the stock markets in Asia seem to be lacking conviction, while U.S. futures are up only modestly in screen trade despite some after-hours gains in big technology stocks like Google.

“I’m still very cautious,” said Justin Gallagher, head of Sydney sales trading at ABN AMRO.

“We’ll be up today, no question. But the reason I’m not getting too excited by the rally is the U.S. economic data this week was appalling. These guys are going into recession at a rate of knots.”

While some volatility indexes fell back overnight, traders kept in mind the large swings on Wall Street, where the Dow Jones Industrial Average initially fell 380 points on downbeat U.S. economic data before staging a late-day rise to end up 401.35 points, or 4.7%.

More large U.S. companies are due to report earnings next week, while the next meeting of the Federal Reserve is drawing closer; the central bank meets on rates Oct. 28 and 29.

Share volume in several places is on the low side, reflecting the lingering caution about the outlook for the global financial sector and, increasingly, the global economy.

“People are clearly not coming out in droves as they are not convinced we are out of trouble,” said Barry Lindsay, research director at First NZ Capital.

Reflecting the economic concerns, base metals continued to slide in Asia though crude oil was moving higher after its recent sharp fall, including a 6.3% drop in New York.

In Australia, traders called the stock gains underwhelming, citing in part a lack of liquidity.

“I don’t have any buying,” said a trader there; “I’m surprised it isn’t a bit more active, to be honest. There’s not as big a follow-through as you might expect.”

Japan markets were being supported by gains in financial stocks after big falls the previous day, with Mitsubishi UFJ up 4.0% and Mizuho FG higher by 3.8%; Sumitomo Mitsui had added 1.8%.

In currency markets, the U.S. dollar was around Y101.35 from an early high of Y101.73, and back near late New York levels; the euro was at Y136.86 compared to Y136.62 late in New York.

The Australian dollar was around US$0.6920, up from US$0.6815 earlier.

Brown Brothers Harriman analysts said the U.S. dollar would benefit from de-leveraging in markets and should trend higher over the long term; “market participants continue to sell assets such as mortgage-backed securities funded by borrowing in U.S. dollars,” they said.

The euro was around $1.3503, from $1.3462 late in New York, but Commonwealth Bank of Australia chief currency strategist Richard Grace said it was unlikely to surpass $1.3538 in Asia; “I’m still looking for the euro to grind lower so it’d still be a sell into rallies,” he said.

Bond markets were higher despite the gains in stocks, with Japanese government bond futures at 136.05, compared to 135.91 on Thursday; Australian and Korean bond futures were also holding up.

Spot gold dropped below $800 with funds selling; “Asia is likely to see more weakness, but physical demand should put some stop under it,” said a Sydney-based trader. The metal was at $797.80, down $6.50 a troy ounce from New York.

Base metals remained under water with LME three-month copper down $279 from the PM kerb, at $4,640 a metric ton; U.S. economic readings continued to paint a gloomy picture with traders noting tepid September industrial output data overnight.

Front-month Nymex crude though was back +$3.03 at $72.86 per barrel after falling to $69.85 overnight; OPEC said it was moving up its meeting to October 24, raising talk of an output cut.

Source: http://www.djnewswires.com/eu

Related Content