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Asia: Stocks swing before China CPI as havens hover; baht surges

Friday, October 14, 2016 - 09:29
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[WELLINGTON ] Asian stocks fluctuated amid renewed focus on the region's largest economy, with a report on Chinese prices due after disappointing trade data damped risk appetite. Singapore's dollar retreated, while the Thai baht extended its advance.

Equities in Japan and Australia swung as those in South Korea rallied, with the US dollar reverting back to gains against some of its high-yielding peers. Haven assets retained support, with the yen largely holding on to last session's recovery with gold.

The baht strengthened after selling off earlier in the week on news Thailand's king was ill. The monarch died Thursday. The Singaporean dollar slipped as the city state's central bank left policy unchanged and growth slowed. US crude was back above US$50 a barrel.

Data due Friday on Chinese consumer and producer prices will get greater attention after the steepest drop in exports since February spurred a flight to safe investments. The figures came after minutes of the Federal Reserve's last meeting showed policy makers are leaning toward raising rates in December.

When combined with one of the worst starts to a US earnings season for stocks since the bull market began seven years ago, and concern over the stability of the pound, fresh concern over China is helping to unnerve markets.

"The Chinese producer-price inflation number is really key for me now," Chris Weston, chief market strategist in Melbourne IG Ltd, said by phone.

"You are seeing a situation where the Chinese are exporting their deflation around the world. That could send emerging markets a little bit lower."

India also issues data on wholesale prices Friday, while the Reserve Bank of Australia reports on financial stability.

Stocks

The MSCI Asia Pacific Index slipped 0.2 per cent as of 9:54am Tokyo time, with Japan's Topix index down 0.2 per cent , after earlier rising as much as 0.4 per cent.

Australia's S&P/ASX 200 Index fell less than 0.1 per cent, as about 50 more stocks climbed as declined. The S&P/NZX 50 Index in New Zealand added 0.1 per cent as futures on the S&P 500 dropped by 0.2 per cent. The US benchmark retreated 0.3 per cent Thursday, trimming an earlier slump of as much as 1.1 per cent.

The Kospi index jumped 0.3 per cent in Seoul as biggest stock, Samsung Electronics Co, climbed for a second day. The company - which is still headed for a weekly slump of 8.4 per cent, the worst since May 2012 - said that it expects a negative impact of around mid-3 trillion won (S$4.15 billion) to operating profit in the fourth and first quarters after halting output of its Galaxy Note 7 smartphones.

In Hong Kong, futures the Hang Seng and Hang Seng China Enterprises indexes rallied at least 0.2 per cent in most recent trading, rising with those on the FTSE China A50 Index.

Currencies

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose 0.1 per cent after snapping a three-day climb to fall 0.3 per cent on Thursday. Singapore's dollar lost 0.2 per cent with the pound, while Korea's won jumped 0.4 per cent.

The baht gained 1.5 per cent, set for its best day since Sept 2013, following a 0.3 per cent bounce on Thursday which helped pare its slump in the week to 0.7 per cent. Financial markets in the South-east Asian nation will open as usual on Friday as the government hasn't requested that they close following the death of King Bhumibol Adulyadej.

The yen was little changed at 103.84 per US dollar after strengthening 0.5 per cent last session, trimming its third straight weekly retreat to 0.8 per cent.

BLOOMBERG