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Asia stocks struggle as traders await Yellen remarks

Tuesday 04:40 GMT.

Overview

Equities in Asia were struggling ahead of comments by Federal Reserve chair Janet Yellen and as oil prices climbed back from a drop spurred by a report indicating output from the US was set to pick up.

Hot topic

Stock markets in the region deteriorated in afternoon trading, with Australia’s S&P/ASX 200 flat after giving up an early gain of 0.4 per cent, pulled lower by declines of around 1 per cent by telecoms and consumer staples stocks.

In Japan the broad Topix index slipped 0.7 per cent as telecoms stocks dropped 1.6 per cent, while the Nikkei 225 index was off 0.8 per cent. Shares in Toshiba fell as much as 10.5 per cent after the troubled nuclear-to-electronics conglomerate failed to publish its quarterly results at noon in Tokyo as scheduled. The Nikkei newspaper earlier on Tuesday reported the company would warn of a risk to its future as a going concern.

Shares in Oversea-Chinese Banking Corp slid 2.9 per cent after the Singapore bank reported that fourth-quarter net profit fell 18 per cent and non-performing loans surged in 2016. Singapore’s FTSE Straits Times index was down 1 per cent.

In Hong Kong the Hang Seng index was flat, while China’s Shanghai Composite index was down 0.1 per cent.

Forex

Currencies markets began heating up in afternoon trading, although the dollar index, which tracks the US currency against a basket of peers, was down just 0.1 per cent.

The Australian dollar was up 0.5 per cent against its US counterpart at $0.7672, while the Japanese yen was 0.3 per cent stronger against the dollar at ¥113.47 after weakening 0.5 per cent on Monday.

China’s renminbi was flat at Rmb6.875 after the central bank set its dollar trading band weaker by 0.1 per cent on Tuesday morning.

The UK pound and the euro each gained 0.1 per cent on the greenback in afternoon trading to $1.2538 and $1.0608, respectively.

Fixed income

Fixed income trading was subdued as investors awaited hints on the outlook for US monetary policy from the Fed chair, who is due to give her semi-annual testimony to the Senate Banking Committee on Tuesday in the US.

The yield, which moves inversely to price, on 10-year US Treasuries was flat at 2.436 per cent, as was that of 10-year Japanese government bonds, at 0.080 per cent.

The biggest move was in New Zealand’s 10-year sovereign bonds, whose yield was up 3 bps at 3.221 per cent. The yield on comparable Australian government bonds was also up 3 bps, at 2.731 per cent.

Commodities

Oil was climbing in Asia following a tumble on Monday after the Energy Information Administration estimated that US crude production would rise by 80,000 barrels a day in March, as more US drillers bring rigs back online in response to stabilising prices.

The price of Brent crude, the international benchmark, was up 0.3 per cent at $55.74 a barrel after dropping 2 per cent on Monday. West Texas Intermediate, the US marker, rose 0.3 per cent to $53.06 after falling 1.7 per cent the previous day.

The price of gold got a boost as equities encountered afternoon turbulance, rising 0.3 per cent to $1,228.18 per ounce.

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