Month: November 2017

Asian stocks search for direction as dollar struggles after Fed minutes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian markets were mostly subdued on Thursday, taking the lead from a quiet overnight session on Wall Street. U.S. stocks had closed narrowly mixed in the lead up to Thanksgiving as investors parsed through minutes from the U.S. central bank.

Markets on the move

Down Under, the S&P/ASX 200 shed 0.07 percent. The energy and materials sub-indexes led gains in the broader market after commodity prices strengthened overnight. Those gains, however, were offset by losses in the utilities and consumer discretionary sub-indexes.

South Korea’s benchmark Kospi index edged down 0.07 percent after markets opened an hour later on Thursday due to a nationwide university entrance exam. Blue-chip tech plays slipped, but several prominent manufacturing names climbed: Samsung Electronics fell 0.93 percent and Posco rose 1.44 percent. Cosmetics companies also made gains in the morning, with Amorepacific tacking on 2.27 percent.

Greater China markets edged down in early trade, with Hong Kong’s Hang Seng Index off 0.15 percent a day after closing above the 30,000 mark for the first time in a decade. On the mainland, the Shanghai Composite slipped 0.36 percent and the Shenzhen Composite lost 0.8 percent.

Elsewhere, Japanese markets were closed for a public holiday. U.S. markets will also be closed for Thanksgiving Day on Thursday.

Stateside, markets closed narrowly mixed on Wednesday. The Nasdaq edged up 0.07 percent to notch a record close of 6,867.36. Other major indexes finished the session a touch softer.

The lead up

Minutes from the Federal Reserve released on Wednesday showed policymakers were largely positive about the economy, even though some officials had concerns about inflation. When it came to market conditions, several Fed members were concerned over “a potential buildup of financial imbalances,” the minutes showed.

Still, the notes reflected that Fed members thought gradual interest rate hikes were likely. Market expectations for a December rate hike stood at 91.5 percent on Thursday morning, according to CME Group’s FedWatch tool.

“[T]he December rate hike seems as close to a done deal as one can ever get, though there was some interesting debate on what to do next year, with the current depleted FOMC camp split on how to operate when the inflation gauge is no longer a reliable pointer,” Rob Carnell, Asia head of research at ING, said in a morning note.

The dollar was little changed against a basket of six currencies after falling to its lowest levels since October in the last session. The dollar index stood at 93.254 at 9:40 a.m. HK/SIN.

Against the Japanese yen, the greenback traded at 111.11, weaker than the 112 level fetched at the beginning of the week and a touch softer than Wednesday’s close of 111.17.

Meanwhile, U.S. durable goods orders for October dipped 1.2 percent, below the 0.3 percent increase expected. That was the first fall in the metric after recording strong gains for the three months prior.

On the data front, Singapore’s economy grew 8.8 percent in the quarter ending in September compared to the quarter before due to strength in the manufacturing sector. That was above the 2.2 percent increase seen in the second quarter and the 7.4 percent growth projected in a Reuters poll.

Elsewhere, the U.K. cut its growth forecasts as the government delivered its Autumn Budget on Wednesday. Growth in 2017 was projected at 1.5 percent, compared to the 2 percent estimated earlier this year. Ahead, growth is expected to fall to 1.3 percent in 2019 and 2020.

Corporate news

Japanese steelmaker JFE Holdings and India’s JSW Steel intend to bid for Bhushan Steel, which went into bankruptcy protection earlier this year, Reuters reported, citing sources.

Australian retailers were also in focus following media reports about e-commerce giant Amazon’s soft launch in the country on Thursday. While the news has yet to be officially confirmed, some Australian retailers were informed by Amazon about an “internal testing phase” starting on Nov. 23, Reuters said Wednesday, citing a source. Retail stocks were mixed: Harvey Norman was off 0.64 percent and Woolworths was higher by 0.04 percent.

“[I]t may be some time before investors can gauge [Amazon’s] impact on the local retail industry,” Ric Spooner, chief market analyst at CMC Markets, said in a note. “The first clue could be signs of extra pressure on margins over the vital Christmas sales period,” he added.

The commodities trade

Oil prices were a touch softer after ending the Wednesday session at a two-year high. U.S. West Texas Intermediate traded 0.1 percent lower at $57.96 per barrel after settling at $58.02 on Wednesday. Brent crude futures were 0.21 percent lower at $63.19.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asia markets trade higher as Hang Seng tops 30,000

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asia markets rose in morning trade on Wednesday, taking overnight cues from Wall Street where stocks rose to record highs after a rally in tech names lifted the broader market. Hong Kong’s main index topped the 30,000 level at market open.

Markets on the move

Australia’s ASX 200 was up 0.37 percent, with most sectors advancing. The energy subindex was up 1.24 percent and the materials sector rose 0.79 percent. The heavily-weighted financial subindex gained fractionally as three of the country’s so-called Big Four banks traded lower.

Shares of ANZ was down 0.32 percent, Westpac was off by 0.34 percent and the National Australia Bank lost 0.23 percent. Commonwealth Bank shares, however, were up 0.41 percent.

Japan’s Nikkei 225 gained 0.84 percent in morning trade, while the Topix was up 0.56 percent. In South Korea, the Kospi rose 0.23 percent.

Chinese markets opened higher, with the Shanghai composite up 0.45 percent in early trade. The Shenzhen composite also rose fractionally to trade at 1,987.53.

Hong Kong’s Hang Seng index broke the 30,000 level to rise 1.01 percent to 30,118.19.

“Markets have remained mostly range-bound ahead of Thanksgiving holidays, although there was a small easing in the dollar on a broad basis,” Wei Liang Chang, a currency strategist at Mizuho Bank, wrote in a morning note.

Worry over flattening yield curves

Long-term US government debt yields fell on Tuesday, while short-term Treasury yields rose. That “flattening” trend is usually present before an economic downturn as risk inflates short-term debt yields.

One economist said a flattening trend did not necessarily mean that recession was imminent.

“We wrote about this some time ago, noting that [the flattening yield curve] was unlikely to be a reliable guide to looming recession risk, despite a slow drift of market names to embrace this view,” Rob Carnell, head of research for Asia at ING, wrote in a note.

Carnell explained that at the long end of the yield curve, things are “remarkably stable.” He pointed out that changes were at the front end of the yield curve.

“And what appears to have driven this front-end rise is the final realization by markets that the Fed is not a “one and done” organization, but really will be following up the December hike with another, and then probably another next year,” he said. Carnell also pointed out that the market was previously “reluctantly pricing in tightening only one meeting at a time, being prepared to price the next hike slowly, only once the last one was safely in the bag.”

On Wednesday morning Asia time, the yield on the benchmark 10-year Treasury note was at 2.3506, while the yield on the 30-year bond was at 2.7531 at 9:28 a.m. HK/SIN. Bond yields move inversely to prices.
Dollar retreats against a basket of currencies

In the currency market, the dollar retreated against a basket of currencies in the early hours of Wednesday Asia time. The dollar index traded at 93.928 at 9:30 a.m. HK/SIN, falling from a previous high of 94.165.

Among currency majors, the Japanese yen traded at 112.28 to the dollar, which was slightly stronger than the 112.6 level it traded near on Tuesday afternoon local time.

Japanese exporters traded mostly higher; shares of Toyota rose 1.27 percent, Honda was up 0.57 percent and Sony added 0.98 percent.

The Australian dollar traded at USD 0.7573, while the euro fetched USD 1.1735. The common currency struggled to break the $1.176 level since news broke that German Chancellor Angela Merkel’s efforts to form a coalition government had failed. Merkel subsequently said she would prefer going to the polls over leading a minority government.

Meanwhile, currency experts at Swiss bank UBS predicted that the dollar is set to have a disappointing run against the euro in 2018 despite the Federal Reserve continuing its current cycle of rate hikes into next year. While a rise in benchmark rates is usually beneficial for the greenback as more people flock to U.S. assets in anticipation of higher yields, UBS said it believes the euro will out-muscle anything the dollar does next year.
Oil in focus ahead of OPEC meeting

Oil prices rose on Wednesday morning Asia time, following overnight gains, ahead of next week’s OPEC meeting in Vienna. Major oil producers are set to decide if they will extend an output cut beyond March 2018 to tackle the global supply glut.

US crude rose 0.79 percent to USD 57.28 a barrel at 9:32 a.m. HK/SIN, while global benchmark Brent rose added 0.37 percent to USD 62.8.

Oil plays in Australia traded mostly higher, with Santos shares rising 1.28 percent, Oil Search up by 1.61 percent and Woodside Petroleum positive by 0.74 percent. In Japan, Inpex shares rose 0.7 percent, while Japan Petroleum added 1.77 percent.

In company news

Elsewhere, shares of Japanese multinational electronics company TDK rose 6.35 percent, following reports that it introduced a rechargeable solid-state battery overnight.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India received a ‘surprise’ upgrade, but other ratings agencies may not be quick to follow

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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After receiving a surprise rating upgrade from Moody’s last Friday, India now has to watch its fiscal health if the country wants similar nods from the other two major agencies, analysts said.

The Moody’s upgrade, the first since January 2004, lifted India up a notch to the second-lowest level of investment grade. Standard & Poor’s and Fitch have had the country, the third-largest economy in Asia, at the lowest investment grade level for about a decade.

The timing of the Moody’s move was actually surprising given questions around India’s fiscal health, three different analysts said. The rating upgrade also came at a time when the most recent gauge of economic growth had shown the country slowing to a three-year low of 5.7 percent — with consumption hit by the new Goods and Services Tax and a ban on high-value notes.

“The timing of the upgrade is odd,” Vishnu Varathan, Mizuho’s head of economics and strategy, wrote in a note on Friday.

He added that India’s widening deficit is made worse by a pick-up in oil prices, while creeping inflation will limit the Reserve Bank of India’s options in managing policy to boost growth. Furthermore, the risk that New Delhi may waive more loans by farmers to gain political favor adds to concerns about the government’s finances and credit discipline, Varathan said.

As such, the other two major rating agencies, Fitch and S&P, would not be in a rush to follow suit, analysts said.

“The timing of (Moody’s) announcement is a positive surprise,” Nomura analysts wrote in a Friday note. “The question now is whether or not S&P and Fitch follow. Our bias is that they will likely wait for the government’s fiscal position to actually improve before making any changes.”

India’s fiscal deficit hit a four-year high of $14.3 billion in the quarter that ended in June — a figure that’s 2.4 percent of the country’s gross domestic product — according to latest data by the central bank.

The Nomura analysts said they expect India’s deficit for the fiscal year ending March 2018 to be larger than the targeted 3.2 percent of GDP. They estimated the shortfall to come in around 3.5 percent of GDP.

But Prime Minister Narendra Modi’s reforms will benefit India over time, Moody’s said on Friday explaining the rationale behind the upgrade. Even though India’s government debt is high — 68 percent of GDP compared to the median 44 percent among countries of the same rating category — reforms have “reduced the risk of sharp increase in debt, even in potential downside scenarios.”

Bank analysts said they agree with Moody’s assessment of India’s outlook. Nomura said the government’s effort may pay off in the next fiscal year with its deficit likely to come down.

“In our view, Moody’s upgrade confirms the positive direction of government reforms and their expected benefits over the medium term. These include implementation of the GST, bankruptcy reforms, infrastructure spending and the large-bank recapitalisation, among others,” Nomura said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Trump says US will designate North Korea a state sponsor of terrorism

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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President Donald Trump on Monday said the US is designating North Korea as a state sponsor of terrorism.

The designation “should have happened a long time ago,” the president said at the start of a Cabinet meeting. He cited the regime’s nuclear weapons program, acts of international terrorism, and the death of 22-year-old student Otto Warmbier of Cincinnati.

The designation will impose further sanctions and penalties on Kim Jong Un’s regime. Trump said the Treasury Department will announce additional sanctions on North Korea on Tuesday.

The move returns North Korea to the list of countries the US views as state sponsors of terror for the first time since 2008. That’s when the North was removed in a bid to salvage a deal to halt its nuclear development.

U.S. officials cited the killing of Kim’s estranged half brother Kim Jong Nam in a Malaysian airport this year as an act of terrorism.

Warmbier died after being returned to the United States from North Korea in an unconscious state. He had been sentenced to 15 years in prison with hard labor after confessing to attempting to steal a banner while visiting North Korea.

North Korea joins Iran, Sudan and Syria on the US list of state sponsors of terror.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tencent becomes first Asian company to be valued over $500 billion

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tencent shares hit a record high Monday, bringing its valuation to over USD 500 billion. The technology firm is the first from China to reach the landmark valuation as it closes in on the likes of Facebook and Amazon.

The Hong Kong-listed internet giant, known for its WeChat messaging app and online games, saw shares rally to 420 Hong Kong dollars (USD 53.76) on Monday. Its market capitalization, or total value of all the shares in circulation, stood at 3.99 trillion Hong Kong dollars (USD 510.7 billion) at the market close.

Tencent’s market cap is above Chinese e-commerce giant Alibaba, which stands at USD 474.15 billion, and Baidu at USD 82.97 billion.

It is closing in on U.S. technology firms including Facebook, which is worth USD 520.14 billion, and Amazon, which is valued at USD 544.46 billion.

Tencent went public in Hong Kong in 2004 at 3.70 Hong Kong dollars per share. Since then, it has rallied 11,251 percent. Tencent’s stock this year alone is up 121.4 percent.

The share price has been driven by Tencent’s continued revenue growth, massive user base and investments into new areas. Last week, the Chinese company reported a 67 percent year-on-year rise in net profit for the third quarter, beating market expectations.

Tencent is a sprawling business. One of its key products is China’s most popular messaging service, WeChat, which is now approaching 1 billion users.

Online and mobile games are a key part of the business — the division brought in over USD 4 billion of revenues last quarter. Last year, Tencent acquired a majority stake in Finnish smartphone maker Supercell, the company behind the popular “Clash of Clans” mobile game.

Other fast-growing parts of the business include digital content such as video, as well as online advertising.

While Tencent may not be a household name in the U.S., it’s continuing to push into new areas, including making big investments in America. It has acquired stakes in both Tesla and Snap, and invested in numerous start-ups in Asia including India’s Uber rival Ola.

Analysts have a positive view on Tencent. Barclays raised its price target from USD 49 to USD 59 on Monday. Last week, Daiwa Capital Markets raised its price target to 480 Hong Kong dollars. In a note, analyst John Choi said that he still sees earnings upside in 2018 driven by a “robust” mobile game pipeline and increasing online advertising monetization.

“Tencent’s disciplined execution and well-positioned multi-engine growth strategy should sustain its valuation premium in the medium to long-term,” Daiwa said in a note on November 15.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin hits new record high, breaking $8,000 for the first time

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Why Elon Musk says he needs to be in love to live a happy life

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Self-made billionaire and serial entrepreneur Elon Musk is best known for his pioneering work in the tech and science space. One of the main keys to his success is his emotional intelligence, as he displays with his family, employees and even upset Tesla customers.

But amid Tesla’s launch of the Model 3 vehicle in July, the company’s chief executive officer revealed he was going through a breakup. In an interview for Rolling Stone’s latest cover story with reporter and bestselling author Neil Strauss, Musk admitted, “If I’m not in love, if I’m not with a long-term companion, I cannot be happy.”

Musk, 46, had been publicly dating Australian actress Amber Heard for about a year when the pair amicably broke up.

“It took every ounce of will to be able to do the Model 3 event and not look like the most depressed guy around,” Musk said. “For most of that day, I was morbid. And then I had to psych myself up: drink a couple of Red Bulls, hang out with positive people and then, like, tell myself: ‘I have all these people depending on me. All right, do it!'”

“I was really in love, and it hurt bad,” Musk said, adding, “Well, she broke up with me more than I broke up with her, I think.”

Leading up to the new Tesla launch, he said he had been in “severe emotional pain” for several weeks.

Strauss added that leading up to the event, Musk meditated “for pretty much the first time in his life to get centered.”

Musk has been married twice before: first to writer Justine Musk for eight years, who is the mother of their five children, and later to actress Talulah Riley, which was on and off for roughly four years.

In 2012, between a divorce and his re-marriage to Riley, Musk told Bloomberg BusinessWeek about his balance between his work life and love life.

“I think the time allocated to the businesses and the kids is going fine,” Musk told Bloomberg BusinessWeek reporter Ashlee Vance. “I would like to allocate more time to dating, though. I need to find a girlfriend. How much time does a woman want a week? Maybe 10 hours?”

Given that Musk splits his time between four companies, reportedly works between 80 to 90 hours a week, gets about six hours of sleep a night and even works while relaxing, Musk doesn’t seem to get much time to himself.

When Musk and Heard ended their relationship last summer, Musk attributed the breakup to this very time constraint over social media.

“Long distance relationships when both partners have intense work obligations are always difficult, but who knows what the future holds,” Musk commented on one of Heard’s Instagram photos.

Musk told Strauss that from the time he was a child, he has never liked being alone. And he’s onto something: The world’s longest study on adult life and happiness has found that good relationships keep us happier and healthier for longer. Even business magnate Warren Buffett argues that “its much more fun achieving things in life with a partner.”

There’s even scientific research to back up Buffett’s advice. A study published by Carnegie Mellon University found that people with supportive spouses are “more likely to give themselves the chance to succeed.”

As for Musk’s future companion?

“I’m looking for a long-term relationship. I’m not looking for a one-night stand. I’m looking for a serious companion or soulmate, that kind of thing,” he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Most citizens support military rule in the world’s largest democracy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India, the world’s largest democracy, is showing an appetite for military rule — a potential indicator that the country’s nationalist politics are evolving.

A majority of Indians, 53 percent, support military rule, according to a Pew Research Center survey released last week. The American think tank said India is one of only four countries that has a majority supporting the idea of a military government. Vietnam, Indonesia, and South Africa are the other three.

At least 55 percent of Indians also back a governing system “in which a strong leader can make decisions without interference from parliament or the courts,” the survey added, noting that support for autocratic rule is higher in India than in any other nation surveyed.

Since its first election in 1952 following the end of British colonial rule, the South Asian nation has become a multiparty government with a parliamentary system and a commitment to free elections. But like many democracies around the world, its citizens are increasingly leaning toward a leader with authoritarian tendencies.

From President Donald Trump to Turkish Prime Minister Recep Tayyip Erdogan to Philippine President Rodrigo Duterte, the revival of the strongman leader has been a defining trend of global politics in recent years. Indian Prime Minister Narendra Modi, who remains immensely popular at home, is no different with his hard-line stance on corruption and security.

Supporters of Modi’s ruling Bharatiya Janata Party (BJP) and urban dwellers “are significantly more likely” to support military rule than backers of the opposition Congress party and rural residents, the Pew Research Center survey showed.

Given India’s high levels of corruption, there’s a public perception that recent tough measures such as demonetization have made sense, so the public now wants a stronger hand on hot-button issues such as economic inequality as well as law and order, explained Tony Nash, founder and CEO of data analytics firm Complete Intelligence.

The survey’s results weren’t surprising, Nash said. “Now that we’re deeper into the nationalistic wave that started with leaders such as Japanese Prime Minister Shinzo Abe, people are seeing that centralized decisions make progress so they’re not opposed to something more dramatic.”

Modi’s critics often accuse his government of autocratic rule. West Bengal Chief Minister Mamata Banerjee, who is the founder of the All India Trinamool Congress political party, alleged last month that the BJP was hurting media freedom by harassing news agencies critical of New Delhi. Another common complaint directed at the BJP is its use of central agencies to interfere in provincial governments.

“In the embrace of strong leaders who promise both economic growth and stability, Asia risks a return to authoritarian rule if institutional checks and balances are not also in place,” said Curtis Chin, former U.S. ambassador to the Asian Development Bank and Asia fellow at the Milken Institute.

“There is no question that these are troubling times for democracy in Asia, but long-suffering citizens want results not rhetoric. The latest Pew data may well underscore that,” he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Euro in focus after German coalition talks break down

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The euro hit a two-month low against the yen on Monday, as German Chancellor Angela Merkel’s efforts to form a three-way coalition government failed, raising concerns over political uncertainty in the euro zone’s largest economy.

Merkel said on Monday she would meet the German president to inform him that she had failed to form a coalition government with the Greens and the pro-business Free Democrats (FDP).

The decision to meet President Frank-Walter Steinmeier, who has the power to call a new election, signalled that Merkel would not seek a minority government with the Greens after the FDP unexpectedly pulled out of the coalition talks.

The euro slid broadly in early Asian trade after news of the breakdown of the coalition talks among German parties reached the market, but later pared some of its losses.

Against the yen, the euro was last down 0.4 percent on the day at 131.65 yen. At one point, the euro slipped to 131.16 yen, its weakest level since mid-September.

The euro fell 0.4 percent on the day to $1.1744. It slipped to as low as $1.1722 in early Asian trade, pulling away from a one-month high of $1.1862 that had been set on Wednesday last week.

“I don’t think this is going to be a massive driver, but that’s certainly the influence that we’re getting right off the bat,” said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore, referring to the political developments in Germany.

“For the longer-term…I think the main driver is going to be what the ECB does,” he said.

The euro had been supported recently by the strength of euro zone economic data and speculation that the European Central Bank (ECB) could start sounding more hawkish about its monetary policy outlook, Innes added.

Improving economic prospects in the euro zone have been a positive for the euro, with growth in the economic bloc having exceeded that of the United States in the third quarter.

The euro’s retreat helped support the dollar against a basket of six major currencies.

The dollar index last stood at 93.927, staying above last week’s trough of 93.402, which was the greenback’s lowest level in about a month.

Against the yen, the dollar briefly touched a one-month low of 111.89 yen but later regained its footing.

The dollar firmed 0.1 percent to 112.08 yen, gaining a bit of reprieve after sliding more than 0.9 percent against the yen on Friday for its biggest one-day percentage drop since June.

The dollar has been weighed down recently by lingering doubts about the prospects for U.S. tax reforms, including tax cuts, which could give a boost to economic growth.

Any potential delay in the implementation of tax cuts, or the possibility of proposed reforms being watered down, would tend to work against the U.S. currency.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asia trades mixed; ASX down 0.23%, Nikkei down 0.22% and Kospi up 0.33%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asia markets were mixed in early trade on Monday, following a decline in US equities last Friday on lingering concerns about American tax reform.

Markets on the move

In Australia, the ASX 200 fell 0.23 percent to 5,943.6 after the first hour of trade. The heavily-weighted financial subindex was down 0.3 percent, while the energy sector gained 0.5 percent.

Japan’s Nikkei 225 was down 0.22 percent, while the Topix index fell 0.2 percent. In South Korea, the Kospi was up 0.33 percent.

One focus for investors: Analysts were cautiously optimistic about the U.S. tax reform getting done this year. Treasury Secretary Steven Mnuchin told CNBC’s “Squawk Box” on Friday that he expects a Republican tax reform bill to be sent to President Donald Trump by Christmas.

Mnuchin made his comments a day after the House passed a bill aimed at overhauling the tax code. The Senate now has to vote on its version of a tax plan.

One commentator told CNBC on Monday that he was advising investors to not make any investment decisions until there was more clarity on the tax reform.

Jim Lowell, CIO at Adviser Investments, told CNBC’s “The Rundown” that the tax reform plan at the moment is more theoretical than practical. He pointed out that tax reforms also tend to have both intended and unintended consequences that are both positive and negative.

“There’ll be plenty of time to digest the plan, if it actually does turn into some mode of enactment,” Lowell said. “There’ll also be plenty of time to figure out how to maneuver as the revisions go forward. But I would definitely advise investors to not make any investment move today based on the fact that they don’t know how this tax reform plan is going to play out.”

Meanwhile, the US dollar traded at 93.932 against a basket of currencies at 8:36 a.m. HK/SIN, hovering near the 94.00 level it saw in the previous week.

Among other currency majors, the Japanese yen traded at 112.12 to the dollar, while the Australian dollar fetched USD 0.7557.

Oil in focus amid rising Middle East tensions

Energy prices were in focus amid reports of heightened tension in the Middle East between Saudi Arabia and Iran, following the resignation of the Lebanese Prime Minister Saad al-Hariri and the escalation of the Yemeni conflict.

Reuters reported that Saudi Arabia and other Arab foreign ministers criticized Iran and its Lebanese Shi’ite ally Hezbollah at an emergency meeting in Cairo on Sunday. They called for a united front to counter Iranian interference.

Meanwhile, Iran exported about 4.26 million barrels of oil from South Pars to international destinations since late March, according to the Iranian Students’ News Agency.

South Pars is the world’s largest gas field that also has significant oil reserves, reported Reuters.

US crude traded up 0.11 percent at USD 56.61 a barrel, while global benchmark Brent fell 0.32 percent to USD 62.52.

Energy plays in Asia Pacific were mostly higher. In Australia, shares of Santos rose 1.9 percent, Woodside Petroleum was up 0.84 percent and Beach Energy was up 0.94 percent. Oil Search shares fell 0.97 percent.

In Japan, Inpex rose 0.52 percent and Japan Petroleum was up 0.54 percent.

Company news

In corporate news, Toshiba said it would raise 600 billion yen (USD 5.3 billion) from a sale of new shares, according to Reuters.

The company needs to raise 750 billion yen by the end of March to plug the hole in its balance sheet following the bankruptcy of its US nuclear power business or it will be delisted from the Tokyo Stock Exchange, Reuters reported.

Toshiba shares were down 3.08 percent in morning trade.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow