Once again we see apprehension in Asian asset classes ahead of major political and economic transitions; firstly participants await the conclusion of the US presidential elections with recent polls putting Obama ahead in the key swing states of Ohio and Colorado. Secondly we had reports yesterday that leaders of the new Chinese politburo will be more conservative than excepted; potentially standing in the way of economic and social reforms.
Asian equities have seen mixed to negative trade with Chinese markets succumbing to downward momentum after the Heng Seng failed to hold above the key psychological level of 22,000. One of the stocks suffering most is HSBC who reported during UK hours a miss on their underlying pre tax profit and also that they would be making a USD 800mln provision for US anti-money laundering, which is slightly smaller than the press reports that suggested that the bank will likely face US criminal charges and settlement costs amounting to approx. USD 1.5bln.
The Nikkei 225 has followed suit, finishing the morning in negative territory (-0.46%) with Diaippon Screen being the main laggard down 13% after cutting its annual forecast and posting an operating loss.
The outperforming Asian equity market has been the ASX 200 trading higher by 0.2% on the day. These gains come ahead of today’s Reserve Bank of Australia’s interest rate decision at 0330GMT/2130CST where expectations are finely balanced between a cut of 25bps or a hold; therefore added volatility in Australian asset classes in the afternoon session is to be expected.
06 Nov 2012 - 02:49 - - Source: RANsquawk
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