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Asia shares shaky, oil recovers after slump on OPEC export rise

Japan Financial Markets

Syndicated News
Written by Syndicated News
SINGAPORE, July 6, 2017 : Asian shares were tentative today after minutes from the Federal Reserve’s last meeting showed a lack of consensus on the future pace of interest rate increases, while oil prices inched higher following the previous day’s steep declines.

MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed early today.

Japan’s Nikkei .N225 slipped 0.15 percent.

South Korea’s KOSPI .KS11 was flat, while Australian shares dropped 0.15 percent. In Asia, trading over the past few days has been buffeted by tensions in the Korean peninsula after North Korea fired a missile into Japanese waters.

Yesterday, U.S. crude tumbled by as much as 5.4 percent, snapping an eight day winning streak, the longest rally in over five years, as rising OPEC exports and a stronger dollar turned sentiment more bearish.

U.S. crude was up 1 percent at $45.59 a barrel early today.

Overnight on Wall Street, the Nasdaq .IXIC closed up 0.7 percent as technology shares recovered, the S&P 500 .SPX was up 0.15 percent and the Dow Jones Industrial Average .DJI was flat.

Fed policymakers were increasingly split on the outlook for inflation and how it might affect the future pace of interest rate rises, according to the minutes of the central bank’s June 13-14 policy meeting released yesterday.

Several officials also wanted to announce a start to the process of reducing the Fed’s large portfolio of Treasury bonds and mortgage-backed securities by the end of August but others preferred to wait until later in the year.

“The minutes from the June 13-14 FOMC meeting underscore that the start of the balance sheet reduction is on course for this year,” Kathy Bostjancic, head of U.S. macro investor services at Oxford Economics, wrote in a note.

“On the interest rate front, we believe rising concerns that the slowdown in the inflation rate could be long-lasting will lead policymakers to forgo additional rate hikes this year and to only raise rates twice (total 50 basis points) in 2018.”

U.S. 10-year Treasury yields dipped to 2.3303 percent, but remained near seven-week highs touched earlier yesterday.

The dollar was steady at 113.25 yen JPY=D4 early today. The dollar index, which tracks the greenback against a basket of trade-weighted peers, was also little changed at 96.305.

Markets are now awaiting U.S. non-farm payrolls for June, due tomorrow, for more insight into Fed policy.

The euro EUR=EBS was flat at $1.13485 early today.

Gold prices were steady at $1,226.31 an ounce. – Reuters

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