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Asian equities struggle as dollar cedes ground

Friday 05.10 GMT

Overview

Equities markets were mixed in Asian trading on Friday as the dollar ceded ground to regional currencies and China reported on-target economic growth ahead of the inauguration of US President-elect Donald Trump.

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The dollar index measuring the greenback against a basket of peers fell 0.2 per cent after a two-day winning streak left it 0.8 per cent higher at Thursday’s close.

The biggest winner among Asia-Pacific currencies was the South Korean won, which gained 0.6 per cent on the greenback to Won1,1170.15 after shedding 0.9 per cent on Thursday. Also up were the New Zealand dollar, which rose 0.3 per cent to NZ$0.7212, and the Australian dollar, which climbed 0.2 per cent to $0.7574.

Japan’s yen strengthened 0.1 per cent to ¥114.74. The currency had softened as much as 0.9 per cent on Thursday but regained most of that ground to end the day only 0.2 per cent weaker.

China’s currency was largely uninfluenced by morning data showing the country’s economic growth had come in at 6.7 per cent as expected. The onshore renminbi was flat at Rmb6.8704 per dollar in afternoon trade. However, the less tightly managed offshore rate was 0.1 per cent stronger at Rmb6.8370.

Equities

Stock indices across the region were mixed as Australia’s S&P/ASX 200 fell 0.5 per cent. Its finance and materials segments both fell 1 per cent while energy stocks dropped 0.6 per cent.

After a choppy morning session Japanese equities finally managed to gain altitude in the afternoon, with both the broad Topix index and the Nikkei 225 climbing to gains of 0.5 per cent.

Hong Kong’s Hang Seng index started low and pushed even lower, dipping 0.6 per cent during the morning session and with energy and consumer staples stocks dropping about 1.2 per cent, while those real estate and financial segments dropped about 0.7 per cent.

In China stocks were on the mend after taking a tumble on Thursday, with the tech-focused Shenzhen Composite Index up 1.5 per cent in afternoon trade — though it was still down 1.9 per cent for the week. The Shanghai Composite Index was up 0.5 per cent.

Fixed income

Treasuries recovered somewhat in Asian trading as the region’s sovereign bonds put in a mixed performance. The yield, which moves inversely to price, on 10-year US government bonds was down 2 basis points at 2.4554 per cent after a two-day losing streak had pushed it up 14bp by Thursday’s close.

Japanese sovereign bonds were steady following a milder rise of three basis points over the same two-day period, with the yield on 10-year notes down 1bp at 0.068 per cent.

The yield on 10-year Australian bonds continued to push higher, rising 2bp to 2.780 per cent after Thursday’s 8bp increase. New Zealand 10-year bonds were five basis points higher at 3.249 per cent, having risen 10bp the previous day.

Commodities

Oil prices continued to gain despite data showing crude inventories in the US had grown more than expected for two weeks running. The international benchmark, Brent crude, notched a 0.5 per cent rise to $54.41 a barrel, while the US benchmark, West Texas Intermediate, was up 0.3 per cent at $51.52.

After an uneven Thursday session in which gold fell as much as 0.7 per cent but closed 0.1 per cent higher, the yellow metal enjoyed a mild recovery in Asia trading with a rise of 0.2 per cent to $1,207.35 an ounce.

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