Asian shares dip but hold weekly gains
TOKYO, December 18, 2015
Asian shares took their cue from Wall Street and slipped on Friday, but were still on track for gains in a week marked by the first US interest rate hike in nearly a decade and a depreciating yuan.
The divergence between US and other countries' policies is already expanding, with Taiwan's central bank unexpectedly cutting interest rates for the second time this year on Thursday.
The bank also said it would keep monetary policy loose to shore up growth in the island's trade-dependent economy as the global demand outlook worsened.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 per cent, but still on track to log a 1.6 per cent rise for the week.
Taiwan stocks slipped 0.6 per cent, shrinking gains for the week to 1.9 per cent. The Taiwan dollar strengthened to T$32.889 versus its previous close of T$33.035 after the central bank said it would maintain an orderly foreign exchange market.
"The global macro dynamics from the beginning of a Fed rate hiking cycle are slowly playing out across the world," Angus Nicholson, market analyst at IG in Melbourne, said in a note to clients.
"In the direct wake of the decision we have seen some dramatic moves in central bank policy with Taiwan cutting its benchmark interest rate, Hong Kong and Mexico both hiking rates, and Argentina removing currency controls and devaluing the peso by 30 percent."
Japan's Nikkei edged down about 0.2 per cent, poised for a weekly gain of 0.4 per cent, as investors awaited the conclusion of the Bank of Japan's two-day meeting expected later in the session.
BOJ policymakers are widely seen holding off on expanding the bank's massive stimulus programme.
Ahead of the policy review, the dollar slipped about 0.1 per cent against the Japanese currency to 122.46 yen, and was up over 1.2 per cent for the week.
Forward markets expect most emerging market currencies, which declined after the Fed's decision to hike rates, to weaken even further next year.
One-year non-deliverable forwards show currencies including the Indonesian rupiah, Indian rupee, the Malaysian ringgit and the Thai baht weakening.
The dollar index, which tracks the greenback against a basket of six rivals, edged down about 0.3 per cent to 99.968, after jumping 1.2 per cent on Thursday, its biggest rise in over a month. It's up about 1.4 per cent for the week.
China's yuan strengthened on Friday after 10 straight sessions of weakness against the dollar through Thursday, the longest weakening streak on record, after the central bank guided the Chinese currency lower.
The People's Bank of China set the midpoint rate at 6.4814 per dollar prior to market open, compared with the previous fix of 6.4757. The spot market opened at 6.4870 per dollar, and was changing hands at 6.4832 at 0306 GMT, up from the previous close of 6.4837.
The euro was up about 0.2 per cent $1.0841, but down more than 1.3 per cent for the week.
Wall Street drooped on Thursday as crude oil futures continued to wallow at multi-year lows against a backdrop of oversupply as well as a stronger dollar following the US Federal Reserve's widely anticipated tightening on Wednesday.
US crude futures continued to slip in Asian trading, down 0.2 per cent at $34.89 a barrel.
Brent ended trade on Thursday less than $1 above its 2004 low of $36.40. It recovered on Friday, rising 0.1 per cent to $37.10.
Gold edged up slightly from Thursday, when it suffered its biggest slide in five months after the Fed's rate hike.
Spot gold rose 0.3 per cent, after tumbling two per cent on Thursday, and is down 1.9 per cent for the week in its worst weekly performance in six weeks. - Reuters
