Asia: Traders take stock after fresh Wall St record

[HONG KONG] Asian markets paused for breath Thursday after Wall Street smashed through 22,000 for the first time, with regional traders focused on fresh clues on the health of the US economy.

Strong Apple earnings propelled the Dow above the barrier to mark its sixth straight record close - but the tech-heavy Nasdaq closed marginally lower.

Tokyo ended a two-day rally to sit 0.4 per cent lower by the break, with several tech companies falling following drops in US peers.

Profit-taking also hit many of Apple's Japanese suppliers which rose the previous day on the US iPhone maker's strong earnings.

Hong Kong shares ended a strong rally which saw prices record the biggest monthly advance in July since January, while Shanghai moved further off its 2017 high achieved Tuesday.

Analysts said despite the euphoria from the Dow's fresh record, investors were still watching the US Federal Reserve's plan to unload its balance sheet following its vast quantitative easing programme.

"Everyone is talking about the record close last night," said Greg McKenna, chief market strategist AxiTrader.

"But despite that, we received some further guidance from a number of Fed speakers overnight about a solid agreement that the balance sheet reduction will happen soon."

US JOBS REPORT

Mr McKenna warned: "If the growth in the balance sheet had stimulatory effects on the economy - and clearly stocks - then why (wouldn't) the reduction in balance sheet size ... act as a de facto tightening." US stocks have risen to a succession of records as second-quarter earnings have broadly exceeded expectations, but equity markets in Europe disappointed, with Paris and Frankfurt down while London pulled back ahead of Thursday's Bank of England interest rate decision.

European bourses also were pressured by the rising value of the euro against the dollar. The single currency moved above US$1.19 for the first time since January 2015 before retreating to trade at around US$1.1840 in Tokyo Thursday.

A trigger for further losses in the greenback could come as soon as Friday if the US jobs report for July disappoints and is seen lessening the odds of additional Fed rate hikes.

Elsewhere in Asia-Pacific, Sydney stocks were down, dragged lower by commodities including mining giant Rio Tinto, whose share price fell after a huge 93 per cent jump in first-half net profit disappointed analysts. Seoul plunged more than 1.5 per cent, pulled lower by Samsung and engineering stocks on government measures to cool the housing market.

"Resource shares may face pressure after copper slid and Rio missed forecast profits," said Michael McCarthy, chief market strategist at CMC Markets.

Oil's seesaw ride eased, with both main contracts stabilising despite underwhelming data on US stockpiles.

"Inventories fell by less than expected 1.5 million barrels, but oil was bailed out by the gasoline number, where stocks fell by a surprisingly large 2.5 million barrels," said Jeffrey Halley, senior market analyst at OANDA.

AFP