Negative sentiment has rolled over into Asian equities from the US session as investor confidence was dampened by ongoing concerns regarding the fiscal cliff, this came on the back of Senator Reid’s comments in the US session saying that little progress has been made recently in debt talks. Adding to this negative tone was the release of the OECD’s semi-annual report earlier in the day where they cut global growth forecasts and warned that the risk of a serious global recession cannot be ruled out.
Taking a closer look at Asian bourses, Japan’s Nikkei 225 is seen trading firmly in negative territory, on course to break a 4-day winning streak. Seven out of ten equity sectors are in the red with Technology and Basic Materials sectors weighing. Recent aggressive reiterations from Japan’s opposition leader Abe calling for bold monetary easing has pushed JGBs to a 9-year high in the morning session.
Elsewhere, the Shanghai Composite Index continues to trade lower, following yesterday’s close below the key psychological 2,000 level for the first time since January, 2009. Investors seem to have no confidence in long-term growth prospects and the government is still sitting on the sidelines doing nothing to reverse the situation with comments from Bank of Communication’s economist saying China’s monetary policy should not be too loose.
In the FX market we have observed a stronger JPY across the board with USD/JPY breaking the 82.00 level with US and Japanese banks touted sellers, as the JPY benefits from safe heaven flows.
Looking ahead, the calendar for the rest of the day remains on the light-side with a lack of tier-1 macroeconomic data, but ECB’s Coeure is due to speak in Hong Kong at 0540GMT/2340CST. Finally, as a reminder, Indian markets are closed for a holiday.
As of 0248GMT:
ASX200 (-0.45%), Nikkei 225 (-0.84%), Shanghai Comp. (-0.67%), Hang Seng (-0.74%), KOSPI (-0.78%)
28 Nov 2012 - 02:49 - - Source: Newswires
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