Asian stocks dipped on Tuesday with latest signs of slower growth in China and the euro zone dampening the mood, although Japan bucked the trend and rose to new seven-year highs on follow-through momentum generated by the Bank of Japan's surprise stimulus move last week.
Spreadbetters expected an effectively flat open for Britain's FTSE, Germany's DAX and France's CAC after Wall Street's surge halted overnight.
The dollar took a breather following a BOJ-inspired surge but still remained near multi-year highs against the yen and euro after the BOJ's shock move raised expectations the ECB will eventually have to adopt quantitative easing, even if not at its meeting on Thursday.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent. Tokyo's Nikkei was up 3.2 percent
after advancing to a peak last touched in October 2007, boosted by the
yen's continuing weakness. Japanese financial markets were closed on Monday for a public holiday. The dollar edged down 0.5 percent to 113.46 yen on profit-taking after scaling a seven-year high of 114.21. "Investors
who missed the initial move are positioning themselves for the next
lurch higher," said Raiko Shareef, currency strategist at Bank of New
Zealand. The euro was up 0.3 percent at $1.2521 after falling to a two-year trough of $1.2390 overnight. Repercussions
from the yen's broad depreciation were felt in South Korea, where
exporters extended losses on worries that a softer Japanese currency
would erode their price competitiveness relative to their Japanese
rivals. South Korean shares were down 0.9 percent. [.KS] The
Australian dollar was up 0.5 percent at $0.8724 as the U.S. dollar gave
back some ground against its peers. Overall reaction to the Reserve
Bank of Australia's widely anticipated decision to leave rates unchanged
was limited. The central bank refrained from stepping up its warnings
about a strong currency, which lifted the Aussie slightly.
The
antipodean currency still remained within reach of a four-year low of
$0.8642 reached last month, and persistent worries about slowing economic growth
in major export partner China, where data on Monday showed
manufacturing activity hit a five-month low, is likely to keep it on the
defensive. The weak Chinese data, coupled with downbeat euro zone
manufacturing PMI numbers, highlighted the contrast in fortunes between
the much of the world and the United States, which showed an unexpected
acceleration in manufacturing activity in October. In commodities, crude oil extended losses after tumbling as much as $2 a barrel overnight after Saudi Arabia deepened price cuts for U.S. customers. Concerns about Chinese and euro zone growth remain bearish themes for the commodity. [O/R] U.S. crude fell to as much as $78.02 a barrel, its lowest since June 2012. The
Malaysian ringgit was near a nine-month low against the dollar on
worries over lower oil prices hurting the country's economic
fundamentals. It
recovered some of its losses, with the central bank suspected of
intervening to support the currency, though that gave investors a chance
to unload the ringgit. "We
cannot fight the USD. We have U.S. jobs data this week, which is
another USD positive factor," said a senior Malaysian bank trader in
Kuala Lumpur.