Asia: Shares held back by insipid Wall St, dollar consolidates

[TOKYO] Asian stocks struggled for traction on Monday after an uninspiring performance on Wall Street at the end of last week, while the dollar consolidated its gains against the yen and euro.

MSCI's broadest index of Asia-Pacific shares outside Japan stood virtually flat, while Tokyo's Nikkei lost 1.2 per cent in early trade. Australian shares dipped 0.1 per cent.

On Friday, the S&P 500 erased an early Federal Reserve-driven rally and closed slightly lower amid a selloff in biotech shares, and the Nasdaq lost 1 per cent. The Dow , however, managed to rise 0.7 per cent.

Fed Chair Janet Yellen last Thursday revived prospects of an interest rate hike before year-end, easing concerns about slowing global growth that helped the dollar and risk assets, which have been buffeted by fears over China's sputtering economy.

Strong second quarter US GDP data released on Friday further sharpened the case for the Fed to raise rates in 2015.

Focus now turns to this Friday's all-important US non-farm payrolls as the markets try to gauge whether labour market conditions are strong enough for the Fed to tighten monetary policy.

The dollar was little changed at 120.48 yen after edging up to a two-week high of 121.24 on Friday as US Treasury yields rose on the strong US GDP numbers and expectations of a Fed hike in 2015.

The euro was also steady, at US$1.1187 after shedding 0.3 per cent overnight. "In terms of price action, we uphold our view of further dollar outperformance versus the emerging market currencies as risk premia remains elevated on China growth, outflows, and policy opacity concerns," wrote strategists at Barclays. "Compared with developed countries, we expect the dollar to appreciate particularly vis-a-vis the euro, as we think the European Central Bank will have to ease monetary conditions at some point before year-end in order to meet its inflation target." In commodities, the lacklustre mood in equity markets spilled over and US crude oil futures lost 0.6 per cent to US$45.42 a barrel.

Gold treaded water after being hit by a stronger dollar. Spot gold was little changed at US$1,146.25 an ounce after dropping 0.7 per cent on Friday.

Platinum, hit recently on fears demand for the metal used in diesel engines would diminish in the wake of the Volkswagen emissions scandal, nudged up 0.3 per cent to US$946.65 an ounce after losing 1 percent overnight. Platinum hit a 6-1/2-year low of US$924.50 an ounce last week.

REUTERS