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Asian Stocks Wilt, US Policy Worries In Charge

Asian Stocks Wilt, US Policy Worries In Charge

David Cottle, Analyst


Talking Points

  • Asian stocks ended the day generally lower if not by much
  • Investors seem a little less certain about US rate-hike timings and the chance of decisive fiscal stimulus
  • Worries about iron-ore price stability weighed on the raw-material-heavy ASX 200

Asian stocks ended the week with widespread if modest falls on Friday.

It looks as though there’ll be a fifth straight weekly gain for many indexes but impetus seemed to be fading in the face of various political uncertainties, not least the US Administration’s economic and tax program. US Treasury Secretary Steven Mnuchin said on Thursday that fiscal stimulus effects may be limited this year.

There’s also heightened uncertainty about the timing of future US interest rate rises. The markets had been looking for a move as soon as next month. However, Wednesday’s set of meeting minutes from Federal Reserve policymakers merely stated that a rise could come “fairly soon,” which has proved a little ambiguous for some investors, with the March-hike thesis now in a little doubt.

A dearth of Asian economic news left these older themes driving once again on Friday. The Nikkei slipped back into the close having erased early losses in the afternoon session. It ended down 0.5%. Australia’s ASX 200 fell 0.8%. The commodity sector is making life tough for the index. Iron ore is a key Australian export and, after a strong rally last year, investors are now wondering whether prices can be sustained in the face of industry and forecaster comment that they may not be.

The US Dollar was mixed against major peers, none of which moved far. It was steady against both the Yen and the Australian Dollar. The latter was not much moved by Reserve Bank of Australia Governor Philip Lowe who told the Australian Parliament that he expects a “period of stability” for interest rates, and that further cuts could push household debt up to “dangerous levels.” Mr. Lowe has made such comments before, however.

Gold prices looked comfortable at 3.5-month highs as investors worried about those US rate-hike timings. Crude oil prices were lower, with both the US benchmark and international Brent slipping by 0.2% in Asia. Thursday’s numbers showed that US stockpiles rose for a seventh straight week, although the latest growth was below expectations.

There’s not a huge amount left in the global session for investors to get their teeth into. They will get a look at Canadian consumer prices and new home sales out of the US. Then there’s the release which brings the curtain down on another US monthly data round. That’s the consumer confidence index from the University of Michigan.

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--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.