Friday 19 January 2018

Asian shares languish at one-month low ahead of US payroll data

Asian stocks
Asian stocks

Asian shares wallowed at one-month lows on Friday as investors braced for the US April payrolls report after jobless claims data raised doubts over the seemingly rosy employment picture.

European shares are also set to open for lower, with financial spreadbetter IG expecting Britain's FTSE 100 to fall 0.2pc and Germany's DAX to start the day down 0.4pc.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.9pc, set for a weekly decline of 3.2pc, the biggest drop in 12 weeks.

Japan's Nikkei, which resumed trading after being closed for holidays since Tuesday, pared earlier losses to close down 0.25pc, as the yen's strength renewed concerns about corporate profits.

China's Shanghai Composite index was down 1.6pc, erasing most gains for the week.

Hong Kong shares retreated 1.2pc, bringing their weekly loss to 4.1pc.

Wall Street shares were mixed on Thursday, with the S&P 500 index's slight 0.02pc drop nevertheless sending it to a three-week low.

"Recent global economic data and some corporate earnings from major Western firms have been lackluster, leading to risk-off trading in markets," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

Economists polled by Reuters forecast Friday's payrolls data will show US employers added 202,000 workers in April following a 215,000 increase in March, with the jobless rate holding at 5.0pc.

But job-related data published over the past couple of days has been softer than market expectations, casting a shadow on expectations of solid job growth.

The number of Americans filing for unemployment benefits rose more than expected last week, posting the biggest gain in more than a year, although its four-week average, often seen as a better gauge of the underlying trend, still stood near a four-decade low.

Another report on Thursday showed a 35pc surge in planned layoffs by US-based employers last month. Most of the announced job cuts were concentrated in the energy sector, which is reeling from low oil prices.

Yet another compilation, the ADP National Employment Report, showed US private employers added the fewest workers in three years in April, well below economists' expectations.

The dollar index "is likely to rip higher if the non-farm payrolls do not massively miss the market consensus, although the big undershoot in the ADP employment numbers this week has certainly highlighted risks to the downside," Angus Nicholson, market analyst at IG in Melbourne, wrote in a note.

The dollar index recovered from Tuesday's 15-month low of 91.919 to trade at 93.806 .DXY =USD, on track for a 0.8pc gain for the week.

The euro slipped almost 0.1pc to $1.1395, heading for a weekly drop of 0.5pc.

The yen, which jumped after the Bank of Japan stood pat on policy last week, changed hands at 107.235 per dollar, off its 1-1/2-year high of 105.55 set earlier this week. It's set for a 0.7pc decline for the week.

The Australian dollar slumped 1pc to a two-month low of $0.7392. The currency has been on a downward trend since a rate cut by the Reserve Bank of Australia earlier this week, and is poised for a 2.8pc loss for the week.

Investors also snatched up bonds, sending the 10-year US Treasuries yield down to 1.735pc, the lowest since April 18. It last stood at 1.7489pc.

Tracking those gains, the yield on 20-year Japanese government bonds plunged to a record low 0.225, down almost 70 basis points since the Bank of Japan announced negative interest rates in late January.

The dollar's strength weighed on oil prices on Friday, offsetting the impact of a raging wildfire in Canada's oil sands region that curbed output flowing mainly to the United States.

US crude's West Texas Intermediate (WTI) futures CLc1 slipped 0.7pc to $43.99 per barrel. They are on track for a 4.2pc slide for the week.

Brent crude futures LCOc1 also retreated 0.6pc to $44.75 per barrel, set for a weekly decline of 7pc.


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