ECB-Inspired Worries About Fed Action Knock APAC Stock Markets
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Asian Stocks Talking Points:
- All major indexes were lower on Friday afternoon
- Investors seem to be looking with more concern towards this month’s Federal Reserve policy meeting
- A mixed Wall Street session didn’t help either
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Asia Pacific stocks were broadly lower as Friday’s session went on, with investors worried that the US Federal Reserve might not be as aggressive in easing monetary policy as they had hoped.
This suspicion seemed to be rooted in little more than the European Central Bank’s Thursday performance. Though by no means hawkish, with President Mario Draghi saying a range of options was under review, the meeting stopped short of flagging immediate lower interest rates.
A mixed day for US earnings was probably weighing too. The likes of Ford and Amazon disappointed Wall Street even as Alphabet, Intel and Starbucks managed after-hours gains.
They weren’t enough to staunch the red on Asian mainboards though, with stocks down from Japan to Australia. The Nikkei was off by 0.5% in the middle of its afternoon. There were local problems to contend with. Nissan shares were unsurprisingly lower on that car giant’s announcement of major global job losses. Softbank did better, with its shares beating the trend of general falls thank to the news that it will launch a successor to its well known Vision Fund.
Over in Sydney the ASX was also down, with banks facing what looked like a day of profit taking after a decent run of gains. Mineral Resources Limited was the standout gainer, reportedly thanks to the clearance by Chinese anti-trust authorities of its deal with lithium major Albermarle.
The broad combination of low interest rates and buoyant resource demand has seen the Aussie benchmark break above its previous trading range this week and get tantalizingly close to its record high.
That said the index’ momentum indicators have also put on a spurt and are straying into overbought territory.
On the currency front the US Dollar was a little stronger generally as investors repriced some of their monetary policy bets.
Still the broad losses for Asian stocks on Friday don’t suggest huge optimism attends the prospect of re-started cabinet-level trade talks between China and the US scheduled for the coming week.
Official US Gross Domestic Product figures for the second quarter are due, with a marked annualized slowdown to 1.8%, from 3.1% expected. The wait for this key number is likely to keep market action subdued across Europe in the runup.
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--- Written by David Cottle, DailyFX Research
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.