Asian stocks steady as calm returns but jitters keep dollar firm

Hong Kong, Sep 30 (BNA): Asian stocks found some calm Thursday after heavy losses in China this week although the dollar settled at its highest level in more than a year against major currencies, buoyed by continued safe-haven demand and expectations. To tighten US monetary policy.

MSCI’s broadest index of Asia Pacific shares outside Japan fell 0.06%, while the Nikkei lost 0.36% daily after Japan’s ruling party quietly chose consensus builder Fumio Kishida as its new leader and new prime minister for the country, according to Reuters.

Concerns about economic growth in China due to a worsening energy crisis combined with fears of a global slowdown, hit Asian stocks on Wednesday.

However, the dollar index – which measures the greenback against six major currencies – hit its strongest levels in nearly 18 months against the yen and in 14 months against the euro. These gains were held in Asian hours, last time at 94.314.

“(The dollar) is breaking through key levels and there has been no real resistance to the breakout, and that tells you there is real fundamental strength to that,” said Chris Weston, head of research at brokerage Pepperstone in Melbourne.

“Sometimes it can become a bit of a magic coin,” he said, noting the fact that it has been backed by both global investors seeking safety and the Federal Reserve getting close to slashing its massive asset purchases.

In addition, analysts at CBA said in a note that “the ongoing confrontation with the US debt ceiling may exacerbate financial market tensions for the short term and support the US dollar in the short term.”

US lawmakers continue to debate government funding but face a Friday deadline to prevent the approaching shutdown, which also limited gains in US stocks overnight.

In Asian stock markets, Hong Kong shares fell 1%, but these were largely balanced by a 1.1% rise in Australia.

Chinese blue-chips gained 0.5% after data published early Thursday showed that the Chinese service sector returned to expansion in September after the coronavirus outbreak abated. However, factory activity unexpectedly contracted as high raw material prices and power outages continued to put pressure on manufacturers. Read more

“China’s energy crisis is likely to continue until the end of 2021, as local governments come under pressure to meet this year’s emissions reduction targets,” Chuping Zhou, global market strategist, JPMorgan Asset Management, said in comments via email.

“Investors may remain cautious about Chinese corporate earnings (in the fourth quarter). Meanwhile, the volatile global market is expected to affect investor sentiment in the near term.”

Another major drag on investor sentiment in Greater China was embattled developer China Evergrande, whose shares swung back and forth, most recently dropping 2.2%.

The company was due to pay interest on dollar-denominated bonds on Wednesday, but Reuters reported that some overseas bond holders had not received interest by the end of the Asian day.

Overnight, the Dow Jones Industrial Average and Standard & Poor’s 500 posted small gains but the Nasdaq Composite was down 0.24%.

Oil prices fell, extending losses after official figures showed an unexpected rise in US inventories.

Brent crude fell 0.14 percent to $78.53 a barrel, and US crude fell 0.03 percent to $74.81.

Spot gold was trading at $1731.99 an ounce, near a seven-week low, limited by a strong dollar.

HF