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Asia bourses, oil and dollar go into reverse

Friday 06:00 GMT

Overview

Stock markets across Asia, oil and the dollar have all gone into reverse on Friday, while government bonds were mixed ahead of the release later today of closely-watched US jobs data.

European bourses are expected to open lower with spreadbetters predicting the UK’s FTSE 100 will slip 40 points to 6,712 and Germany’s Dax to drop 55 points to 10,479. US index futures suggest the S&P 500 will ease half a point to 2,190.5, when trading gets underway later in New York.

Hot topic

Prices might be peeling back in Asia, but oil has remained one of the standout stories over final few days of the week. Brent crude, the international benchmark, rallied a combined 16.3 per cent over Wednesday and Thursday in the wake of Opec members agreeing to cut supply for six months starting in January.

In Friday trading, Brent was letting off some steam, down 1.2 per cent at $53.32 a barrel, while West Texas Intermediate sank 0.8 per cent to $50.67.

What to watch

Investors may also be heading for the sidelines ahead of the November non-farm payrolls report later on Friday that is expected to show the US economy added 170,000 jobs last month.

It will be one of the final major pieces of information the Federal Reserve takes account of ahead of the December 15-16 policy meeting at which it is widely expected to raise interest rates by 25 basis points for the first time in a year.

Equities

The stronger yen was an additional pressure for Japanese stocks, with the Topix down 0.5 per cent, but the overall mood toward equities was sour following a negative lead from Wall Street.

Australia’s S&P/ASX 200 lost 1 per cent, with investors particularly taken aback by Bellamy’s Australia, an organic baby food maker, whose shares fell as much as 43.9 per cent after its revenue forecast fell short of analysts’ estimates and it said it had disrupted by regulatory hurdles in China.

Hong Kong’s Hang Seng was down 1.3 per cent and China’s Shanghai Composite fell 0.8 per cent.

Forex

The US dollar index was 0.3 per cent weaker at 100.87 on Friday, facing its fifth decline in six sessions. Still, it was a split performance for currencies across Asia, with the Japanese yen, up 0.1 per cent at ¥114.05.

The Australian dollar was 0.2 per cent weaker, but had initially been buoyed by better-than-expected retail sales data.

Fixed income

Following a mid-week sell-off, bonds were back in favour on Friday as investors sought the relative safety of US government paper.

The yield (which moves inversely to price) on the 10-year US Treasury was down 1.6 basis points at 2.4317 per cent, pulling back from their highest in 17 months. However, Australian and Japanese government bonds were weaker.

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