Asian markets tick lower after healthy rally as dealers step back

by AFP/ pic by AFP

HONG KONG – Asian markets turned lower on Thursday as the dealers begin to wind down ahead of the Christmas break and as the rally fuelled by the China-US trade pact loses steam.

There was little major reaction after the House of Representatives voted to impeach Donald Trump as he is unlikely to be removed from office by the Republican-held senate.

With few catalysts to drive business, investors were taking it easy after a rollercoaster year that has seen equities swing back and forth mostly by trade rows between the US and China as well as other major allies, while Brexit has also played a key role.

The hope is that now Washington and China have reached a partial tariffs agreement – and British politics is on a more even keel after last week’s decisive election win for pro-Brexiter Boris Johnson – markets can enjoy a healthy 2020.

Analysts pointed to a recent run of positive economic data around the world that indicates the slowdown in global growth could be nearing a bottom, which could help Wall Street extend its record-breaking run.

“The trade deal relief rally looks set to take on a fundamental shift as the global growth rally trade of 2020 starts to build momentum on the back of the decisive run of comprehensive economic data to end the year,” said Stephen Innes at AxiTrader.

Last Friday’s China-US pact provided a boost to global markets – which had already been rallying for weeks in anticipation of a deal – but they were unable to keep up the pace as this week rolled on.

On Wednesday the Dow and S&P 500 dipped slightly, though the Nasdaq managed to eke out yet another all-time high.

Asia was on the back foot. Hong Kong lost 0.4 percent in the afternoon and Tokyo ended 0.3 percent lower.

Sydney fell 0.3 percent and Singapore dropped 0.2 percent while there were also losses in Taipei, Manila, Bangkok and Jakarta.

However, Seoul and Mumbai rose while Wellington rallied more than one percent. Shanghai was virtually unchanged.

“With the holiday season nearly upon us, attention seems more focused on flights home and calorific intakes than flights to quality,” said OANDA senior market analyst Jeffrey Halley.

High-yielding currencies were enjoying strong buying as the optimistic tone boosted demand for riskier assets, with South Korea’s won, the South African rand, and Australian and New Zealand dollars all well in the green.

The pound remained depressed, having given up its post-election gains after Johnson said he would pass a law preventing an extension to the next phase of Brexit, reviving the chances of a no-deal divorce at the end of next year of an EU trade deal is not struck.

“There is a fear the UK could end up leaving the trading bloc without a deal, and that has encouraged some traders to lock-in profits on stocks as well as the pound,” said David Madden at CMC Markets. But he added: “Declines in equities and sterling must be put in context with the gains that were racked up recently.”

Key figures around 0720 GMT

  • Tokyo – Nikkei 225: DOWN 0.3 percent at 23,864.85 (close)
  • Hong Kong – Hang Seng: DOWN 0.4 percent at 27,772.60
  • Shanghai – Composite: FLAT at 3,017.07 (close)
  • Pound/dollar: UP at $1.3090 from $1.3082 at 2140 GMT
  • Euro/pound: UP at 85.00 pence from 84.96 pence
  • Euro/dollar: UP at $1.1128 from $1.1116
  • Dollar/yen: DOWN at 109.57 yen from 109.59 yen
  • Brent North Sea crude: UP eight cents at $67.25 per barrel
  • West Texas Intermediate: UP four cents at $60.97 per barrel
  • New York – Dow: DOWN 0.1 percent at 28,239.28 (close)
  • London – FTSE 100: UP 0.2 percent at 7,540.75 (close)