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Asia markets cautious as Wall St and dollar weaken

Tuesday 06:00 GMT

Overview

Markets across Asia were trading cautiously as Wall Street and the US dollar weakened overnight and the price of oil has pulled back.

European bourses are expected to open a touch weaker, with spreadbetters predicting the UK’s FTSE 100 will slip about 10 points to 6,790 and Germany’s Dax to drop 20 points to 10,562. US index futures suggest the S&P 500 will be barely changed at 2,202 when trading gets underway later in New York, having retreated 12 points on Monday.

Hot topic

Eyeing a possible third consecutive day of declines, the US dollar index was 0.1 per cent lower at 101.28 in Asian trade and was facing its longest losing streak since the start of this month.

The US dollar index was suffering only a mild retreat in Asian trade but its decline over the past three sessions has stalled a global rally in stocks and a sell-off in bonds since Donald Trump was elected US president.

Equities

Japanese stocks were lower after the decline in the dollar caused the yen to strengthen overnight. The Topix benchmark was down 0.2 per cent, possibly bringing an end to a 12-day winning streak that is its equal third-longest of the past 30 years. The Nikkei 225 was down 0.3 per cent.

Australia’s S&P/ASX 200 closed 0.1 per cent lower, while Hong Kong’s Hang Seng was down 0.1 per cent. China’s Shanghai Composite was up 0.5 per cent and the technology-focused Shenzhen Composite was flat.

Forex

The yen was 0.1 per cent weaker at ‎¥‎112 per dollar but its 1.1 per cent jump overnight has proved enough to keep equities under pressure. The currency strengthened briefly following the release of retail sales and household spending data that showed a less severe contraction in October.

The best-performing major Asian currency on Tuesday was China’s renminbi, up by one-third of 1 per cent at Rmb6.892 per dollar as the greenback weakened and the country’s central bank fixed the currency’s trading range with the US dollar stronger.

Commodities

Oil prices were slightly weaker ahead of Wednesday’s much-anticipated meeting between Opec members that markets hope will result in supply cuts.

Brent crude, the international benchmark, was down two-third of 1 per cent at $47.92 a barrel, while West Texas Intermediate was down by 0.6 per cent at $46.79. Prices jumped 2 per cent on Monday on hopes that the Opec meeting would yield a deal.

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