Asia takes stock after Wall St record
HONG KONG: Asian markets paused for breath Thursday after Wall Street smashed through 22,000 for the first time, with investors focused on fresh clues on the health of the US economy.
Strong Apple earnings propelled the Dow above the barrier to mark its sixth straight record close -- but the tech-heavy Nasdaq closed marginally lower.
Trading screens across Asia were a sea of red, with Tokyo halting a two-day rally to close 0.3 percent lower, as several tech companies fell following drops in their US peers.
Profit-taking also hit many of Apple’s Japanese suppliers which had risen the previous day on the US iPhone maker’s better-than-expected results.
Hong Kong shares ended a strong rally that had seen prices record the biggest monthly advance in July since January, while Shanghai moved further off its 2017 high achieved Tuesday.
Analysts said despite euphoria over the Dow’s fresh record, investors were still watching the US Federal Reserve’s plan to unload its balance sheet following its vast quantitative easing programme.
“Everyone is talking about the record close last night,” said Greg McKenna, chief market strategist AxiTrader.
“But despite that, we received some further guidance from a number of Fed speakers overnight about a solid agreement that the balance sheet reduction will happen soon.”
McKenna warned: “If the growth in the balance sheet had stimulatory effects on the economy -- and clearly stocks -- then why (wouldn’t) the reduction in balance sheet size... act as a de facto tightening.”
US stocks have risen to new highs as secondquarter earnings have broadly exceeded expectations, even as the greenback has come under sustained pressure from political uncertainty in Washington with the Trump administration mired in controversy.
The dollar has been losing ground against the euro, which moved above $1.19 Wednesday for the first time since January 2015 before retreating to trade at 1.1846 in Tokyo Thursday. The dollar was also up from lows of 110.26 yen earlier this week at 110.66.
‘Significant’ US jobs report
But a trigger for further losses in the greenback could come as soon as Friday if the US jobs report for July disappoints and is seen lessening the odds of additional Fed rate hikes.
The nonfarm payrolls data is “shaping up to be a majorly significant event,” said Stephen Innes, who heads Asia-Pacific trade at forex firm OANDA.
“With summer setting in and holiday liquidity upon us, Friday’s jobs report could be the last hurrah before what is shaping up to be a very interesting September for Fed watchers,” he added.
Investors were also digesting a report the US is planning to take trade measures against China to force it to crack down on theft of intellectual property, a move that could disrupt ties between the world’s top two economies.
European stocks slid in cautious opening trade on Thursday, with London down 0.2 percent ahead of an interest rate decision from the Bank of England.
Elsewhere in Asia-Pacific, Sydney stocks were down, dragged lower by mining stocks including Rio Tinto, whose share price fell after a huge 93 percent jump in first-half net profit disappointed analysts. Seoul plunged more than 1.5 percent after left-leaning President Moon Jae-in announced plans to raise taxes on big corporations.
Oil’s seesaw ride continued, with both main contracts resuming declines after underwhelming data on US stockpiles, showing inventories fell by a less-than-expected 1.5 million barrels.