Asian stocks ease, dollar near two-week lows on Trump comments

SYDNEY: Asian shares dipped yesterday while the dollar fell after US President Donald Trump criticised the Federal Reserve’s monetary policy and amid reports Japan’s central bank could wind back its massive fund purchases.

Trump, on Friday, lamented the recent strength of the US dollar and accused the European Union and China of manipulating their currencies.

The remarks, coupled with new threats to slap duties on all US imports from China, have triggered an equities sell-off with MSCI’s broadest index of Asia-Pacific shares outside Japan falling 0.2 per cent on Monday.

Spreadbetters pointed to a soft start for European shares, extending losses from Friday, while Wall Street futures were a shade weaker with E-Minis for the S&P 500 off 0.1 per cent.

Japan’s Nikkei stumbled 1.3 per cent while South Korea’s Kospi index slipped 0.8 per cent.

“It does feel like we are hearing far too much from the President’s Twitter account at the moment and the market is not receiving many of his comments well,” said Nick Twidale, analyst at Rakuten Securities Australia.

“But...investors are quite rightly positioning themselves accordingly,” he added.

“The threat that US policies pose to global growth is considerable and the market will continue to react to presidential tweets and comments while they are coming thick and fast.”

Trump’s comments against Fed rate hikes eased the greenback and helped steepen the Treasury yield curve.

Also playing a role in the global tick-up in yields and declines in the dollar was a Reuters report that the Bank of Japan was in unusually active discussions to modify its massive easing programme.

The BOJ, in turn, offered to buy an unlimited amount of fiveto10-year Japanese government bonds on Monday.

Benchmark 10-year JGB futures, which had started lower on Monday, pared some of their losses on the announcement.

The Reuters report and the dollar’s weakness together added to the yen’s strength, which was last up 0.4 per cent at 111 per dollar.

The dollar index went as deep as 94.207 on Monday, the lowest in more than two weeks. It was last down 0.1 per cent at 94.38.

Analysts at JPMorgan said these moves, together with a lower greenback and better commodity prices, should be positive for Asian equities.

Indeed, Chinese and Hong Kong shares were in positive territory on Monday after a subdued start.

The blue-chip index gained 0.5 per cent while the Hang Seng index was a touch firmer. “Trade tensions remain a risk, but with an extended period until implementation (of the tariffs) and the next round of escalation, APAC equities are unlikely to respond much to Trump repeating threats already known,” JPMorgan added. — Reuters