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Asian markets struggle for traction

Tuesday 02:10 GMT

Overview

Stock and currency markets across Asia were mixed as Wall Street again pulled back from record highs, leaving the Dow Jones Industrial Average shy of the 20,000 milestone.

Hot topic

Producer price inflation in China continued to climb, with data showing wholesale prices rose in December at their fastest pace since September 2011. The producer price index was up 5.5 per cent year on year, beating economists’ forecasts, while the consumer price index grew 2.1 per cent, a touch below expectations.

The rise in wholesale prices reflects the impact of structural reforms that have helped reduce overcapacity in some sectors, but also points to the substantial speculation in China’s onshore commodity futures market, says Zhou Hao at Commerzbank.

“The Chinese authorities have expressed concerns over these market speculations, and ‘bubble deflating’ tops the policy agenda for the coming year,” Mr Zhou said.

Equities

The Topix pushed 0.2 per cent higher as Japanese investors returned from a long weekend. Takeda Pharmaceutical was up 1.5 per cent after announcing it had agreed to buy US cancer drug manufacturer Ariad Pharmaceuticals for $5.2bn.

Australia’s S&P/ASX 200 was down 0.8 per cent, driven lower by declines for banks, as well as by energy stocks that were hit by weaker oil prices.

Hong Kong’s Hang Seng was up 0.2 per cent, while in China the Shanghai Composite was off 0.3 per cent and the technology-focused Shenzhen Composite slipped 0.1 per cent.

Forex

Nearly all Asian currencies were firmer against the US dollar, although none of the major ones gained more than 0.1 per cent.

The US dollar index was flat at 101.91, having dropped 0.3 per cent on Monday in a session that prompted some sharp moves for big global currencies. The pound eased 0.1 per cent to $1.2155, after sinking 1 per cent on Monday following a weekend reiteration by Prime Minister Theresa May that the UK’s divorce from the EU could be a “hard Brexit”.

The yen was 0.1 per cent stronger at ¥‎115.88 per dollar, having gained 0.9 per cent on Monday.

Commodities

Crude oil prices were up 0.1 per cent, with Brent, the international benchmark, at $55.01 a barrel and West Texas Intermediate at $52.03.

Prices fell 3.8 per cent in the previous session, under pressure following data on Friday that showed the US rig count rising for the 10th week in a row and countering expectations that output cuts by Opec, implemented this month, would buoy prices.

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