Talking Points
- Asian shares followed Wall St. lower; a March US rate hike is thought ever more likely
- The US Dollar slipped back, but is much higher on the week
- Friday offers plenty of Federal Reserve commentators, most notably Chair Janet Yellen
Asian markets struggled on Friday, mostly reflecting previous session’s US pullback as investors seemed ever more certain that the Federal Reserve will increase interest rates in March.
Comments from many Fed officials this week have the markets on watch for a move on the 15th,when the Federal Open Market Committee will next announce policy. Most recently Fed board member Lael Brainard and San Francisco Fed chief John Williams have said that rates could soon be going up.
The Nikkei was down 0.5% at the Tokyo finish. A modest pullback in the US Dollar hadn't helped- exporter stocks were notable laggards. South Korea’s Kospi was harder hit. It was down more than 1% following reports that the country’s Duty Free retailer Lotte had been under cyber attack, possibly originating in China. Reuters said that the attack followed Lottte’s decision to make land available for a US missile defense system in South Korea.
Hong Kong shares slipped too, as did the Shanghai mainboard. However, the Shenzhen composite managed marginal gains. Australia’s ASX was firmly in the red, with banks losing ground again. Asian economic data were sparse. Japanese consumer prices came in much as expected (that’s to say pretty weak). Chinese media group Caixin’s monthly look at the country’s private service sector found it still expanding in February, but at a slower pace.
The dollar index slipped close to 102, having been as high as 102.19 earlier. It’s still up quite a lot for the week though, having started below the 101 handle. Gold prices fell back once again, although not by much. The possibility of higher US rates is taking a toll on this non-yielding haven asset. Crude oil prices were up a little with gains of about 0.1% seen for both the US and Brent benchmarks.
The rest of the session will bring investors Purchasing Managers Indexes from around Europe and the US. Chicago Fed President Charles Evans and Richmond’s Jeffrey Lacker will speak in New York, but with respect to both gentlemen, they are likely to be just the warm up act for Fed Chair Janet Yellen. She will address the Executives Club of Chicago on the economic outlook. Stay tuned.
Would you like to know more about trading the financial markets? The DailyFX trading guide is here to help.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
