Asian Stocks Talking Points:
- Asian stocks were broadly lower
- The arrest of Nissan’s Chairman weighed, as did a new gaggle of tech-sector worries
- The US Dollar slipped back a little more as investors weighed the monetary policy outlook
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Asian stocks found the going very tough on Tuesday, with plentiful individual stories conspiring to hold the bulls in check.
The arrest of Nissan Chairman Carlos Ghosn saw that name tank in Tokyo. Mr Ghosn faces allegations of financial misconduct, with Chief Executive Hiroto Saikawa saying on Monday that he would propose the Chairman’s removal from his role.
Tech stocks were also under pressure as the US titans of Facebook, Apple, Amazon, Netflix and Alphabet (Google), slipped collectively into bear-market territory with them all 20% below their most recent peaks. The Financial Times also reported official Chinese allegations of antitrust violations by giant chipmakers Samsung, Micron Technology SK Hynix.
All of the above, and some general Wall Street weakness, was enough to see all major Asia-Pacific bourses lower as their closes approached. The Nikkei 225 was down 1.1%, with the ASX 200 off 0.4%, The Kospi shed 1%, with the Hang Seng down 2% and Shanghai 1.7% in the red.
The US Dollar was near two-week lows against major traded rivals, still beset by suspicions that there may not be as many interest-rate rises ahead from the Federal Reserve as the markets had previously thought. Feeble homebuilder sentiment released on Monday also weighed. The Australian Dollar weakened a little through the session too. The minutes of the last Reserve Bank of Australia monetary policy meeting evinced nothing new. The central bank said that the next move in interest rates is still likely to be a rise, but that there was not case for any such move soon. Markets certainly agree, with rare futures tipping no move at all through all of this year, but that has been so for some time.
Crude oil prices were steady, reportedly as investors suspected that OPEC supply cuts will head off the prospect of a lasting glut. Gold prices edged lower but, with risk appetite very nervy, the market appears to retain plenty of fundamental support. The market remains net-long to a very high degree.
The broad daily chart uptrend channel which has held since mid-August is still very much in place, but the most recent rally has so far failed to top its own previous significant high.
That trend line could face another test if the rally has indeed faded out, but that is not yet confirmed by price action.
Tuesday’s remaining economic schedule is heavy on central bankers. Reserve Bank of Australia Governor Philip Lowe who will speak in Melbourne, while Bank of England chief Mark Carney and other luminaries will offer regular testimony to Parliament.
Away from the monetary halls of power, US housing start and building permit data are also due.
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--- Written by David Cottle, DailyFX Research
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