HONG KONG, China (AFP) — Asian shares turned lower Friday following losses in New York and Europe as traders fret over the state of the global economy, with potentially big market-moving events coming into focus.
After a healthy run of recent gains helped by rising oil prices, investors took a step back as the head of the European Central Bank (ECB) called for action to kickstart eurozone growth — which was taken as a sign its own arsenal is running low.
Mario Draghi said the cost of delaying reforms would be “simply too high”.
His comments follow an indication from Federal Reserve boss Janet Yellen that it will likely not lift interest rates until the fourth quarter, while other central banks have either announced or are contemplating cuts.
Attention is now on next week’s policy meetings of the US and Japanese central banks.
The Bank of Japan earlier this year adopted a negative interest rate policy, following a similar move in 2015 by the ECB, in a bid to nurture investment. But the move has been criticised as being ineffective and some lenders say their bottom lines are being hit.
Also, there are fears that a British referendum on its European Union membership on June 23 will see a vote to leave, which many fear could unleash a wave of turmoil across world markets. The pound, which has seen increasing volatility in the weeks leading up to the poll, edged up to $1.4457 from $1.4453 in US trade.
The cautious tone sent traders into safe investments with the yen rising against the dollar and emerging market currencies falling against the greenback. The South Korean won was down 0.8 percent and the Australian dollar shed 0.4 percent. Malaysia’s oil-reliant ringgit gave up 0.7 percent.
– British EU exit fears –
“The market is looking at a very small chance of the Fed moving next week,” Chris Green, the Auckland-based director of economics and strategy at First NZ Capital Group, told Bloomberg News.
“While that’s been supportive of risk assets, a delay in the Fed rate hike is also a reflection of weaker economic backdrop. Further weakness in US economic data along with the potential for (a British EU exit) would be a cause for concern.”
Japan’s Nikkei ended 0.4 percent lower, while Hong Kong was off 0.7 percent in the afternoon as traders returned from a one-day public holiday.
Sydney shed 0.9 percent and Seoul was 0.3 percent lower, while Singapore eased 0.7 percent. Shanghai was closed for a public holiday.
Oil prices drifted lower for a second day as investors booked profits from a recent surge that has seen the commodity touch 11-month highs.
In the morning West Texas Intermediate dipped 0.7 percent to $50.21, having Thursday hit its highest level since July. Brent was down 0.6 percent at $51.65.
However, with the dollar unlikely to pick up any time soon — which makes crude cheaper for holders of other currencies — analysts are tipping the black gold to break the $55 barrier soon.
– Key figures around 0700 GMT
-Tokyo – Nikkei 225: DOWN 0.4 percent at 16,601.35 (close)
Hong Kong – Hang Seng: DOWN 0.7 percent at 21,141.32
Shanghai – Composite: Closed for a public holiday
Euro/dollar: DOWN at $1.1301 from $1.1315 late Thursday
Dollar/yen: DOWN at 107.00 yen from 107.10 yen
Pound/dollar: UP at $1.4457 from $1.4453
New York – Dow: DOWN 0.1 percent at 17,985.19 (close)
London – FTSE 100: DOWN 1.1 percent at 6,231.89 (close)
dan/iw
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