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Havens gain with dollar and Asia stocks pressured

Monday 04:30 GMT

Overview

Dollar weakness weighed down Asia-Pacific equities while government bonds and gold gained as investors in the region sought havens in the wake of US President Donald Trump’s failure to repeal Obamacare.

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The US dollar was lower against a variety of currencies in Asia as investors tempered expectations of pro-business reforms from the Trump administration after Republicans failed to unify around healthcare reforms last week.

The dollar index tracking the US currency against a basket of peers was down 0.3 per cent at 99.3, dropping further below the psychologically important 100-point mark and at its lowest point since February 2.

Japan’s yen was leading gainers with a climb of 0.9 per cent to ¥110.33 per dollar — its strongest since November 22. The South Korean won was up 0.7 per cent at Won1,114.66 per dollar, its highest level in nearly five months.

The euro was up 0.5 per cent versus the dollar at $1.0849, the strongest since December 8.

Equities

Asia-Pacific equities fared badly, with Japan-listed stocks feeling the squeeze from renewed yen strength.

Tokyo’s Topix index was down 1.2 per cent with across-the-board losses led by declines of 2.1 per cent in real estate and 1.9 per cent for financials.

In Sydney the S&P/ASX 200 was off 0.2 per cent, tugged lower by a 1.5 per cent fall in the materials segment.

Hong Kong stocks were little helped by their currency’s peg to the US dollar, with the Hang Seng index shedding 0.2 per cent. The consumer staples segment was off 1.3 per cent while the real estate sector was off 0.8 per cent.

Shares in Sinopec rose 1.8 per cent after the state-owned Chinese oil refiner reported annual profits rose 44 per cent in 2016. China Southern Airlines climbed 2.9 per cent after the carrier confirmed it was in talks with American Airlines about a stake sale.

Fixed income

Investors sought safety in government bonds as the dollar fell. The yield on 10-year US Treasuries, which moves inversely to price, fall 5 basis points to 2.364 per cent, the lowest since February 28.

Regional government debt was benefiting, with the yield on Australian 10-year bonds falling 6 bps to 2.684 per cent while that on the equivalent Japanese government bond was down 1 bp at 0.049 per cent.

Commodities

Gold rallied in the face of market volatility, climbing 1.1 per cent to $1,256.72 per ounce.

Oil prices pared gains notched in a recovery late on Friday. Brent crude, the international benchmark, was off 0.1 per cent at $50.74 a barrel while the US marker, West Texas Intermediate, was down 0.3 per cent at $47.82.

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