Negative sentiment has rolled into today’s Asian equity markets, following the risk-off sentiment in EU and US markets where virtually all indices experienced heavy losses due to renewed concerns surrounding both Italy and Spain. The Nikkei 225 is trading in the red weighed by the financial sector which was also the biggest laggard in EU & US markets. Hitachi was among the worst performers of the index after cutting FY operating profit forecast 13% to JPY 420bln. The Hang Seng has been today’s worst performing market weighed heavily by Sinopec, after the Co. announced plans to raise HKD 24bln in a stock placement. It is worthwhile to keep in mind, the current pullback in the markets has come after a solid start to the year and could be signs of profit taking.
In the FX markets, EUR/USD dipped under the 1.35 level amid the ongoing EU concerns. The AUD briefly strengthened after a narrower than expected trade deficit report, however the move was pared shortly after, and the focus now shifts towards the RBA’s cash target rate. As for JPY/USD, it has bounced from its lows following safe haven flows which strengthened the JPY during the EU and US sessions.
Looking forward, the RBA cash target rate is scheduled to be released at 0330GMT/2130CST, where expectations are for the rate to be held due to a solid start to the year by major economies, improving global sentiment and the near-term stabilization of Australia’s terms of trade supported by rising iron ore prices.
As of 0247GMT:
ASX200 (-0.47%), Nikkei 225 (-1.31%), Shanghai Comp. (-0.72%), Hang Seng (-1.72%), KOSPI (-0.98%)
05 Feb 2013 - 03:48 - - Source: RANsquawk
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