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Asia: Stocks down after weak US data, Tokyo hit by strong yen
[HONG KONG] Most Asian stock markets sank Thursday after US growth data fell well short of forecasts, sending the dollar to a near two-month low against the euro as the chances of an interest rate hike in early summer faded.
The single currency was also supported by hopes Greece will reach a bailout reform deal with its creditors.
Tokyo tumbled 1.91 per cent as the yen rose against the greenback, while Hong Kong lost 0.39 per cent, Sydney fell 0.71 per cent and Seoul was 0.52 per cent lower. Shanghai was flat.
The Commerce Department said Wednesday that the US economy grew at an annualised rate of 0.2 per cent in January-February, far short of the 1.0 per cent projected by analysts. The result is the latest indicating weakness in the world's number one economy.
Later in the day the US Federal Reserve said the slowdown was due "in part" to transitory factors and expansion should continue at a "moderate pace".
That suggested the Fed still expects to begin a slow series of rate rises in the coming months, though not likely in June as many analysts had been expecting until recently.
"The jury is still out on whether the weakness points to a more structural slowdown in the economy," Mark Lister, head of private wealth research at Craigs Investment Partners, told Bloomberg News.
"While plenty of people are expecting the rate hike to be pushed back even to 2016, its important to watch the next piece of economic news to gauge whether the weakness we've seen was a one-off or the beginning of a trend." The news pushed Wall Street's main indexes lower. The Dow shed 0.41 per cent, the S&P 500 dropped 0.37 per cent and the Nasdaq fell 0.63 per cent.
And the dollar also came under further pressure as the likelihood of a rate hike, which tends to lift the currency, slimmed.
The greenback was at 118.92 yen early Thursday, slipping from 119.02 yen in New York.
Also, the euro took extra support as Greece prepared to present its creditors with a series of reform measures as it looks to unblock much-needed cash to service its debts and avert a default that would likely see it crash out of the eurozone.
The euro bought US$1.1122 - a level not seen since March 3 - and 132.31 yen. While that compares with US$1.1128 and 132.45 yen in New York, it is sharply up from US$1.0998 and 130.90 yen earlier Wednesday in Asia.
Traders seemed unaffected by a decision by Moody's to downgrade Greece's debt further into junk territory, citing "high uncertainty" Athens can reach an agreement.
On oil markets US benchmark West Texas Intermediate for June delivery fell seven cents to US$58.51 a barrel in morning Asian trade and Brent dropped 41 cents to US$65.43.
Gold fetched US$1,206.14 against US$1,208.05 late Wednesday.