SYDNEY: Asian stocks fell on Friday, Aug 20 and the yen threatened to hit 15-year highs in the wake of disappointing U.S. data that heightened worries about slackening growth in the world's largest economy.
Investors looking for reasons to be cautious found backing in data that showed U.S. jobless claims at a nine-month high and the first contraction in a year in a volatile U.S. regional manufacturing index.
That revived fears that the United States may be sliding back into recession, or a "double dip", and tipped investors' favour once more towards less risky havens such as gold, yen, and U.S. and Japanese government bonds.
"On the face of it, these are two very good reasons to be cautious on the recovery and no doubt double dippers will be dancing," said Adam Carr, an analyst at ICAP in Sydney, though he argued that the market gloom was overdone.
Stock investors put safety first, however.
Japan's Nikkei fell 1.2 percent as the yen gained on the dollar after the poor U.S. data, though expectations that the government or central bank may soon ease monetary policy further kept the slide in stocks in check. The MSCI stock index outside Japan shed 0.9 percent, with Australian and New Zealand stocks leading the way down.
For the week, however, the index was on track for a modest rise of 0.3 percent, but far from recouping last week's 2.9 percent drop as concerns about faltering global growth intensified.
In Sydney, the benchmark stock index lost 1 percent, dragged down by declines in heavyweight miners BHP Billiton and Rio Tinto amid talk that their planned $116-billion iron-ore joint venture was failing.
BHP was further weighed by its head-turning $39 billion hostile bid for Canada's fertiliser producer Potash Corp, which could be the world's biggest corporate takeover this year. BHP shares fell 1.4 percent as investors feared it would have to raise its bid, while Rio slid 2.6 percent.
With stocks under pressure, U.S. and Japanese government bonds benefitted.
U.S. two-year yields were down near a record low of 0.476 percent, and 10-year yields stayed near a 17-month trough of 2.557 percent.
Japanese government bonds jumped, in part on talk the Bank of Japan (BoJ) may further loosen policy to weaken the strong yen, which is threatening export growth, the lone bright spot in the country's economy.
Fears of BoJ intervention kept the yen from testing a 15-year low of 84.72 hit last week, though it fell as far as 84.89 yen in offshore trade.
"Everyone thinks the dollar will extend losses against the yen. But fears of intervention and caution about additional monetary easing steps in Japan are making players hesitate to aggressively sell the dollar for now," said Tsutomu Soma, senior manager in the foreign securities arm at Okasan Securities.
The overall cautious tone supported gold at 1-1/2-month highs and kept oil under pressure near six-week lows. - Reuters
Investors looking for reasons to be cautious found backing in data that showed U.S. jobless claims at a nine-month high and the first contraction in a year in a volatile U.S. regional manufacturing index.
That revived fears that the United States may be sliding back into recession, or a "double dip", and tipped investors' favour once more towards less risky havens such as gold, yen, and U.S. and Japanese government bonds.
"On the face of it, these are two very good reasons to be cautious on the recovery and no doubt double dippers will be dancing," said Adam Carr, an analyst at ICAP in Sydney, though he argued that the market gloom was overdone.
Stock investors put safety first, however.
Japan's Nikkei fell 1.2 percent as the yen gained on the dollar after the poor U.S. data, though expectations that the government or central bank may soon ease monetary policy further kept the slide in stocks in check. The MSCI stock index outside Japan shed 0.9 percent, with Australian and New Zealand stocks leading the way down.
For the week, however, the index was on track for a modest rise of 0.3 percent, but far from recouping last week's 2.9 percent drop as concerns about faltering global growth intensified.
In Sydney, the benchmark stock index lost 1 percent, dragged down by declines in heavyweight miners BHP Billiton and Rio Tinto amid talk that their planned $116-billion iron-ore joint venture was failing.
BHP was further weighed by its head-turning $39 billion hostile bid for Canada's fertiliser producer Potash Corp, which could be the world's biggest corporate takeover this year. BHP shares fell 1.4 percent as investors feared it would have to raise its bid, while Rio slid 2.6 percent.
With stocks under pressure, U.S. and Japanese government bonds benefitted.
U.S. two-year yields were down near a record low of 0.476 percent, and 10-year yields stayed near a 17-month trough of 2.557 percent.
Japanese government bonds jumped, in part on talk the Bank of Japan (BoJ) may further loosen policy to weaken the strong yen, which is threatening export growth, the lone bright spot in the country's economy.
Fears of BoJ intervention kept the yen from testing a 15-year low of 84.72 hit last week, though it fell as far as 84.89 yen in offshore trade.
"Everyone thinks the dollar will extend losses against the yen. But fears of intervention and caution about additional monetary easing steps in Japan are making players hesitate to aggressively sell the dollar for now," said Tsutomu Soma, senior manager in the foreign securities arm at Okasan Securities.
The overall cautious tone supported gold at 1-1/2-month highs and kept oil under pressure near six-week lows. - Reuters
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