Member access

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 

Euro under a cloud in Asia, stocks sit on gains

06/11/2014 | 02:51am US/Eastern

The euro came under mounting pressure on Wednesday as the European Central Bank's embrace of negative interest rates encouraged flows out of the zone, while Asian shares consolidated near recent highs.

The single currency was slipping across the board as investors looked to borrow euros at super-low rates and buy higher-yielding assets abroad, the so-called carry trade.

"The chase for yield looks like it has further to run," said Shane Oliver, head of investment strategy at AMP Capital.

"The ECB’s actions provide a reminder global monetary conditions remain very easy which is supportive of relatively high yield assets and growth assets generally."

In contrast the dollar found support in a run of improving U.S. economic data which pushed up Treasury yields and stoked speculation the Federal Reserve might sound less dovish on policy when it meets next week.

That diverging outlooks shoved the euro down to $1.3536 and further away from a $1.3668 peak scored at the start of the week.

It also hit a seven-month trough on the higher-yielding Australian dollar and to near its lowest against the pound since late 2007.

Action in equity markets was more muted with many indices already having come a long way. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.12 percent from a three-year peak.

The MSCI index of emerging markets has also been on a roll to reach its highest since May 2013, in part on speculation the ECB's increasingly aggressive easing will encourage fund flows to the emerging world.

Japan's Nikkei ended up 0.5 percent aided by MSCI's decision to remove South Korea and Taiwan indexes from its review list for reclassification to developed markets, keeping them in the emerging markets classification.

There had been speculation Tokyo equities would take the brunt of rebalancing if Korean and Taiwanese shares were reclassified to developed markets.

Moves had been minor on Wall Street with the Dow up 0.02 percent, while the S&P 500 down 0.02 percent and the Nasdaq Composite 0.04 percent firmer.

RISING YIELDS

The flow of U.S. data has been bright enough to soothe worries over the economy after a disappointing first quarter. Tuesday's releases showed small business confidence and job openings reaching heights not seen since 2007.

That in turn has led the futures market <0#FF:> to nudge forward the likely timing for a first rate hike from the Federal Reserve, though that is still well into 2015.

Likewise, U.S. Treasury yields have reversed decisively higher with 10-year paper paying 2.646 percent compared to a trough of 2.402 percent just two weeks ago.

"The bull moves in bonds that began early this year are now officially over," said William O'Donnell Treasury strategist at RBS Markets. "As such, I still expect cash 10-years to trade at 2.80 percent over the coming month."

The prospect of higher yields has offered some support to the U.S. dollar which held at 80.811 against a basket of currencies, a long way from May's low of 78.906.

Still, the broader moves were more about euro weakness than dollar strength. Sales of euros for yen, for instance, were sizable enough to push the yen up on the dollar. The euro fell to 138.44 yen and the dollar to 102.25.

The adoption of negative deposit rates by the ECB has sparked talk reserve managers at other central banks were trimming their euro holdings, and that the very low yields offered by peripheral euro zone debt was finally discouraging demand for the paper.

In commodities, gold was firm at $1,261.50 an ounce as a breakdown in strike talks in South Africa buoyed palladium and platinum.

Brent oil gained 21 cents to $109.73 a barrel, while U.S. crude prices added 12 cents to $104.47.

(Editing by Shri Navaratnam)

By Wayne Cole

React to this article
Latest news
Date Title
1m ago ENGAGEMENT LABS : Released Results for Its Nine-Month Period Ended September 30, 2014
1m agoDJBrazil's Levy Named Finance Minister, Barbosa as Budget Minister -- 2nd Update
1m ago Engagement Labs Released Results for Its Nine-Month Period Ended September 30, 2014
3m ago Duncan Park Enters Into Loan Agreements
5m ago PETROLEUM & RESOURCES : Nigerian oil minister elected OPEC President
5m ago BELVEDERE RESOURCES : Private Placement
8m ago RIO TINTO : Significant increase to Hunter Valley Coal reserves and resources
12m ago SHAW COMMUNICATIONS : Business Offers New Managed WiFi Solution for Hospitality Clients
12m ago Shaw Business Offers New Managed WiFi Solution for Hospitality Clients
12m ago MEDIA ADVISORY : Government of Canada to Announce Investment in Support of Innovative Cutting-Edge University Research
Latest news
Advertisement
Hot News 
Novo Banco CEO sees no new capital need, deposits recovering
DIXONS CARPHONE : *citigroup raises carphone warehouse price target to 480 (430) pence - 'buy'
IMPAX ASSET MANAGEMENT : Raises Dividend As Pretax Profit Rises
AUGEAN : Capital Markets Day
DRIVER : Shares Hit Seven Week High After Big Oman Contract Win
Most Read News
1d ago GOPRO : Hero 3 Christmas Discount Covered in New Price Guide at ReelGifts.com
1d ago APPLE : Global tablets expected to slow in 2015, led by iPad shipment downturn
1d agoDJWAL MART STORES : Cuts Nearly 30 Directors and Midlevel Managers in China--Spokesman
14h ago LEGAL & GENERAL : £2.5bn TRW Pension Scheme bulk annuity contract'
13h agoDJMONITISE : Santander, Telefonica, MasterCard Invest GBP49.2 Million
Most recommended articles
1m agoDJBrazil's Levy Named Finance Minister, Barbosa as Budget Minister -- 2nd Update
38m ago TSX energy stocks tumble with oil after OPEC holds output
38m ago UniCredit, Fortress-Prelios make progress in UCCMB sale talks - sources
41m agoDJHutchison Whampoa Prepping Bid for U.K.'s EE or O2 -Reuters
44m agoDJBNP PARIBAS : Correction to oil prices article
Dynamic quotes  
ON
| OFF