Asia: Markets mostly lower, weak yen supports Tokyo

[HONG KONG] Asian markets retreated on Monday morning following a strong end to last week and despite another record close on Wall Street, although Tokyo was supported by a weaker yen.

The euro continued to hold its strength, even though there has been no breakthrough in talks between Greece and its creditors on overhauling its bailout terms.

Hong Kong eased 0.63 per cent, Shanghai lost 0.57 per cent, Sydney fell 0.43 per cent and Seoul shed 0.10 per cent. Tokyo rose 0.49 per cent.

Regional investors took a breather after Friday's rally across most indexes, overshadowing another record finish on the S&P 500.

The US gains came after more weak data indicating a recovery in the world's number one economy may not be as strong as thought, making an expected interest rate hike unlikely in the near future.

US industrial production fell 0.3 per cent in April, the fifth straight month of decline, according to Federal Reserve data, while the University of Michigan's US consumer sentiment index plummeted to 88.6 in May from 95.9 in April.

That came after figures last week showed the US producer price index fell in April, confounding forecasts for a rise, while retail sales saw their weakest year-on-year growth since 2009.

"Investors are likely to start the week in cautious mode as markets assimilate the impact of weaker than expected US data and wait on developments in the Greek debt saga," Ric Spooner, chief market analyst in Sydney at CMC Markets, wrote in an e-mail to clients.

"The first Fed rate hike now seems at least several months away. While this supports equity valuations, it also means that the outlook for world growth remains subdued," he said, according to Bloomberg News.

The S&P 500 edged up 0.08 per cent to another record high and the Dow added 0.11 per cent but the Nasdaq dipped 0.05 per cent.

On currency markets the prospect that US rates will remain at record lows for now had little effect on the dollar, which rose to 119.63 yen in Tokyo, from 119.41 yen in New York late Friday.

The euro fetched US$1.1430 and 136.74 yen, against US$1.1446 and 136.67 yen.

While the single currency remains supported, traders are keeping tabs on Greece's talks with the European Union and International Monetary Fund as they struggle to agree a deal that will release billions of euros of much-needed funds.

With Athens warning it will run out of cash by the end of the month there are fears it will default on its debt obligations, which could lead to it leaving the eurozone.

Oil prices were higher. US benchmark West Texas Intermediate for June delivery gained 19 cents to $59.88 while Brent crude for June rose 15 cents to US$66.96.

Gold fetched US$1,222.97 from US$1,214.19 late Friday.

AFP