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Global Markets: Asian shares wobbly as risk sentiment sours, euro buoyant

Reuters  |  SYDNEY/TOKYO 

By and Tomo Uetake

SYDNEY/TOKYO (Reuters) - Asian shares retreated from a 2-1/2 month high on Friday as investors turned away from emerging markets due to uncertainties over global trade relations, and expectations of more U.S. rate hikes and a wind down of a massive monetary stimulus in

MSCI's broadest index of shares outside fell 1.1 percent after six straight sessions of gains took it to the highest since mid-March. It was still on track for a weekly gain of more than 1 percent.

Chinese shares slipped, with the blue-chip Shangai-index down 1.7 percent and Hong Kong's Hang Seng declining 1.5 percent.

Japan's Nikkei average and South Korea's were off 0.6 percent and 0.8 percent, respectively, while Australian shares ended 0.1 percent lower.

The and Nasdaq ended lower on Thursday while Treasuries gained.

Spreadbetters expected the weaker tone in equities to carry over into Europe, forecasting a lower open for Britain's FTSE, Germany's DAX and France's CAC.

Risk appetite waned after U.S. jobless claims pointed to a further tightening in labour market conditions, cementing expectations the Federal Reserve will raise benchmark U.S. rates next week and twice again later in the year.

Its policy-making (FOMC) holds a two-day meeting starting on June 12 that is is widely expected to result in the second interest rate increase of the year. The focus is on whether the central will hint at raising rates a total of four times in 2018.

European Central policymakers meeting on June 14 will debate whether to end purchases later this year, the bank's said on Wednesday, giving a hawkish message that sent the to a three-week top, hit emerging markets, and spurred demand for safe-haven bonds.

"Markets are having to rediscover how to price risk amid reduced central buying and that adjustment could prove very hard," said Matt King, Citi's

Before those key central bank meetings, markets will have to digest the fallout from this weekend's summit in Quebec, where the mounting risk of tariff wars between the and its major trade partners will be in the spotlight.

"I care about the upcoming FOMC meeting more than summit this weekend," said Yasuo Sakuma, at

"I'm not talking about the rate hike this month, which has already been priced in the market, but the pace of rate increases beyond June. Foreign speculative investors appear to be pulling out of emerging markets, including and "

The upcoming, historic U.S.-summit in on June 12, where the main issue is whether will abandon its nuclear weapons programme, gave investors another reason for caution.

CURRENCIES, COMMODITIES

In emerging market currencies, the South African rand, Brazil's real and the Mexican peso were the worst hit overnight."Risk trades were lower across the board in the markets as the yen and Swiss francs appreciated against the greenback and on the crosses. We saw more volatility in the emerging markets," said Nick Twidale, Sydney-based at

The U.S. dollar rebounded 0.2 percent from near three-week lows against a basket of currencies, helped by the strong jobless numbers.

The dollar has come under pressure this week as the bounced back from 10-month lows thanks to an ebb in Italian political concerns and speculation that the ECB could signal intentions to start unwinding its purchasing programme.

On Friday, the inched down to $1.1782 after four straight session of gains took it to the highest level since mid-May.

The greenback was little changed against the safe-haven Japanese yen at 109.63, but remained well below a four-month top of 111.39 touched in May.

In commodities, copper came off from a 4-1/2-year high touched on Wednesday.

reversed earlier gains and fell as surging U.S. output as well as signs of weakening demand in weighed on markets, even though supply woes in and OPEC's ongoing production cuts offered crude some support.

U.S. crude fell 0.5 percent to $65.63 a barrel, while Brent dropped 0.5 percent to $76.92.

Spot gold slipped 0.1 percent at $1,295.06 an ounce.

(Reporting by and Tomo Uetake; Editing by Simon Cameron-Moore)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, June 08 2018. 13:12 IST
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