ASIA MARKETS: Nikkei Slumps To 3-month Low As Asian Markets Dip
August 17 2017 - 11:31PM
Dow Jones News
By Ese Erheriene
Stocks pull back after Barcelona attack, geopolitical
worries
Equity markets across the Asia-Pacific region were down Friday
with Japan's Nikkei hitting a three-month low, weighed by overnight
weakness on Wall Street following days of solid gains.
Concerns about a terrorist attack in Barcelona, Spain, that left
at least 13 people dead, as well as political uncertainties in the
U.S. and simmering geopolitical tensions spurred investors to pull
their money from riskier assets.
"We can now see a reversal in fortunes and sentiment
deteriorating," said Chris Weston, chief market strategist at IG
Group. Overnight in the U.S., the Dow Jones Industrial Average
experienced its biggest decline in three months, while Wall
Street's "fear gauge," the CBOE Volatility Index, jumped more than
30%.
The Nikkei Stock Average was down 0.9% in early Asian trade,
after falling to its lowest level since May. The advance of the yen
against the dollar added pressure, with the Japanese currency also
hitting multiweek highs against the euro and the British pound, to
the detriment of Japanese exporters. The yen was last up 0.2%
versus the greenback .
Still, analysts expect solid Japanese corporate earnings to
limit declines in the local equities market. "Fundamentals aren't
that bad," said Takashi Hiratsuka, trading group leader at Resona
Bank's asset management division. He noted that some buying was
emerging following the early declines Friday, helping the Nikkei
bounce back from the session lows.
Elsewhere in Asia, Hong Kong's Hang Seng Index fell 1.2%, while
Australia's S&P/ASX 200 was down 0.8%, and Korea's Kospi fell
0.3%.
Financial shares saw some of the region's steepest declines on
Friday. In Tokyo, life insurers led the way down, with Dai-ichi
Life Holdings (8750.TO) down 3.1% while T&D Holdings (8795.TO)
was down 2.8%. In Australia, three of the country's four biggest
banks -- Westpac Banking (WBK) , National Australia Bank (NABZY)
and Australia and New Zealand Banking Group (ANZ.AU) -- were down
more than 1.2%.
Meanwhile, further chaos in the Trump administration risk
hurting market confidence and business sentiment globally, analysts
say. Overnight, U.S. government bond prices briefly surged on
rumors that the director of the U.S. National Economic Council,
Gary Cohn, was resigning after President Donald Trump's remarks on
Charlottesville.
Two White House aides later told The Wall Street Journal that
Cohn hasn't resigned and wasn't planning to do so, but the market
response showed how traders were closely following events at the
White House. Prices for most U.S. government bonds have since
declined with yields higher in Asian trade.
"It is better to look for opportunities outside of the U.S.,
where there is better momentum for growth or reform," given the run
up in U.S. valuations following the presidential election, said
Paul Flood, a multiasset portfolio manager at Newton Investment
Management, which manages 90 billion Australian dollars (US$71
billion) in assets.
In commodities, oil prices were flat in Asian trade after prices
snapped a three-day losing streak overnight in the U.S. The market
remains concerned about increased U.S. production after data from
the Energy Information Administration showed that oil production
topped 9.5 million barrels a day. The data offset the positives
from a nearly nine million-barrel decline in the amount of stored
U.S. crude oil last week.
(END) Dow Jones Newswires
August 17, 2017 23:16 ET (03:16 GMT)
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