Asian mar­kets strug­gle as oil re­sumes losses

The Myanmar Times - - International Business -

MOST Asian mar­kets slipped yes­ter­day as traders trod wa­ter ahead of a key speech by Fed­eral Re­serve boss Janet Yellen this week, while oil suf­fered fresh losses on glut wor­ries.

With spec­u­la­tion grow­ing that US in­ter­est rates could rise by the end of the year, Ms Yellen’s com­ments at a global cen­tral bankers meet­ing in Jack­son Hole to­mor­row will be scoured for for­ward guid­ance on US cen­tral bank pol­icy.

There is a chance bor­row­ing costs could rise as soon as next month, an­a­lysts say, but most bets are on a move just be­fore the end of the year, or in Fe­bru­ary.

“While re­cent US data has been mixed, the base case for the Fed is prob­a­bly to in­crease rates in the ab­sence of any com­pelling rea­son not to,” Michael McCarthy, chief mar­ket strate­gist in Syd­ney at CMC Mar­kets, told Bloomberg News.

“The Fed is aware that there’s a sub­stan­tial risk that if eco­nomic con­di­tions de­te­ri­o­rate, they have very lit­tle room to move. Given this, the cen­tral bank wants to nor­malise rates as soon as they can.”

The dol­lar rose against most other cur­ren­cies, hit­ting 100.30 yen from 100.23 yen in New York, while the euro eased to US$1.1295 from $1.1307. The greenback was also sharply up against high-yield­ing units in­clud­ing the Aus­tralian dol­lar, the South Korean won and the In­done­sian ru­piah.

On eq­uity mar­kets Tokyo ended 0.6 per­cent higher and Syd­ney edged up 0.1pc.

But most other mar­kets were lower. Hong Kong lost 0.8pc and Shang­hai ended 0.1pc lower, while Seoul shed 0.3pc. There were also losses in Manila and Jakarta.

In early Euro­pean trade Lon­don and Frank­furt lost 0.6pc while Paris shed 0.7pc.

Oil traders were also in re­treat, hit by data from in­dus­try group the Amer­i­can Pe­tro­leum In­sti­tute show­ing a surge in stock­piles.

West Texas In­ter­me­di­ate slipped 1.6pc to $47.35 and Brent was off 1.3pc at $49.33.

The losses more than wiped out the Au­gust 23 gains that were fu­elled by a re­port say­ing Iran could sup­port ef­forts by OPEC and Rus­sia to limit crude out­put, hav­ing pre­vi­ously said it was against the idea.

The com­mod­ity plunged on Au­gust 22 af­ter Iraq said it plans to boost pro­duc­tion, while a rebel group in Nige­ria called a ceasefire af­ter months of at­tack­ing oil in­stal­la­tions in the coun­try.

But Stephen Innes of OANDA said, “With Jack­son Hole and mon­e­tary pol­icy in both Ja­pan and US tak­ing cen­tre stage we ex­pect limited fol­low-through, but traders will keep an eye out for an es­ca­la­tion of po­lit­i­cal ten­sion.” –

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