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Dollar’s drop eases as Toshiba tumbles further

Friday 04.40 GMT

Overview

Market volatility dissipated in Asia trade on Friday as the dollar’s downward momentum eased and US Treasuries steadied, but equities in the region were led lower by heavyweights including Toshiba and Samsung.

Hot topic

Shares in Japan’s Toshiba dropped as much as 12.2 per cent, bringing the company’s market capitalisation nearly 25 per cent lower for the week with a cumulative loss of more than $2bn. Conglomerate SoftBank dropped as much as 1.7 per cent as investor enthusiasm appeared to wane for the company’s $3.3bn acquisition of US alternative asset manager Fortress Investment Group. The stock had erased the entirety of its post-announcement gains as of mid-morning trade. Tokyo’s Topix index was off 0.4 per cent.

Stock in Samsung Electronics fell as much as 2 per cent on Friday after the early-morning arrest of Lee Jae-yong, heir apparent of Samsung Group. The arrest of Mr Lee for bribery, embezzlement and perjury was made in connection with an investigation by a special prosecutor into the massive corruption scandal that has engulfed President Park Geun-hye. The Kospi index was down 0.1 per cent.

Hong Kong-listed shares in MGM China fell as much as 5.1 per cent after the casino operator announced underwhelming fourth-quarter results that showed mass-market revenue for the period down 2 per cent from the previous year. Shares in rival Sands China were also off as much as per cent. The benchmark Hang Seng index was down 0.4 per cent.

Forex

A retreat by the dollar was levelling off on Friday after the dollar index, which measures the greenback against a basket of peers, dropped 0.7 per cent on Thursday. The index was flat in Asia trade.

China’s renminbi notched a minor landmark moment overnight as the offshore exchange rate against the dollar briefly weakened past the level of its more tightly regulated onshore counterpart twice. The onshore rate quickly weakened 0.2 per cent to Rmb6.8662 per dollar at the open in Asia, however, restoring the spread as the offshore rate notched a slight rise of 0.1 per cent to at Rmb6.8524.

Fixed income

A Thursday rally in US government bonds pared back in Friday morning trade. Yield, which moves inversely to price, on 10-year US Treasuries rose 1 basis point to 2.459 per cent after closing the previous day down 5bp.

In Asian markets the 10-year government bonds for Australia and South Korea were both 1bp lower, with Australia’s notes the only loser in the region thanks to a 1bp rise.

Commodities

Oil prices were settling down on Friday after a sharp dip the previous evening amid continued concerns about rising crude stockpiles in the US.

Brent, the international benchmark, was up 0.2 per cent at $55.77 a barrel, having fallen as much as 1.1 per cent on Thursday. The US marker, West Texas Intermediate, was up by the same amount at $53.44.

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