Asian stocks fall after shock Swiss move

HONG KONG: The euro sank almost 2.0% against the Swiss franc yesterday and Asian markets tumbled as traders were left stunned by Switzerland’s shock decision to remove its currency cap against the euro.

Oil edged up slightly, meanwhile, after plunging Thursday in reaction to Opec’s announcement that it produced more than its limit of the black gold in December, despite weak demand, low prices and a supply glut.

Global markets were stunned Thursday when the Swiss National Bank (SNB) said it would scrap its 1.20 franc cap to the single currency, which had been in place since the height of the European debt crisis three years ago.

The news immediately sent the Swiss unit surging 30% to 0.8517 at one point before ending the day at 1.0035. In Asian trade, it rose again, sitting at 0.9945.

It also led already nervous dealers scurrying for safer investments, particularly the Japanese yen, although some confidence returned over the day.

The dollar edged up to 116.70 yen yesterday from 116.25 yen late in New York, but it is still well down from the 117.70 yen seen in Tokyo earlier Thursday.

The European common currency fetched $1.1643 and 135.86 yen, compared with $1.1623 and 135.12 yen in US trade. But while it is marginally up from New York, it is still sharply down from $1.1773 and 138.64 yen Thursday before the SNB move.

Adding to downward pressure on the euro is the growing expectation the European Central Bank will unveil a vast bond-buying scheme next week aimed at kickstarting growth and avoiding deflation.

Tokyo tumbled 1.43%, or 244.54 points, to end at 16,864.16. The index at one point was almost 3.0% down but recovered as the yen pared its gains.

Sydney sank for the fifth consecutive session, shedding 0.60%, or 32.1 points, to close at 5,299.2 and Seoul closed 1.36% lower, giving up 26.01 points to 1,888.13. Hong Kong fell 1.02%, or 247.39 points, to end at 24,103.52

However, Shanghai rose 1.20%, or 40.04 points, to 3,376.50. Traders extended a more than 3.0% gain Thursday that was fuelled by bets that the government will unveil new economyboosting measures.

Bullion rose to $1,259.59 an ounce yesterday from $1,246.19 late Thursday.

Oil prices ticked up following another sell-off Thursday that came in reaction to Opec’s announcement.