Asia’s major markets declined yesterday following a three-day rally across the region, while traders await the release of key Chinese trade data later in the day.
While Wall Street provided a positive lead thanks to another pick-up in oil prices, dealers decided to take a break and cash in their recent gains while the World Bank cut its growth outlook for the global economy.
The Dow and S&P 500 shifted higher on Tuesday, led by energy firms as crude pushed above $50 to sit at 11-month highs thanks to a weaker dollar and output disruptions in key producer Nigeria.
Market players will be closely watching the release in Beijing of import and export figures, with expectations of another drop as the world’s number two economy is dragged by a long-running growth slowdown. Ahead of the release, Shanghai was down 0.7%, Hong Kong lost 0.5% and Sydney was 0.4% lower.
Japanese investors were unimpressed by news that the country’s economy grew a little more than first thought in January-March, with the Nikkei down 0.3% by the break.
The figures will do little to change the view that Prime Minister Shinzo Abe’s programme to kickstart the economy with a big spending, easy money policy is struggling more than three years down the line.
“Even with the...revision, there’s no change to the picture that Japan’s economy has plateaued and has no clear driver to boost momentum in the months ahead,” Koya Miyamae, an economist at SMBC Nikko Securities in Tokyo, said before the report was released. While the news does not flag a rebound in the world’s number three economy, it could sway the Bank of Japan against unveiling any fresh stimulus for the time being.
That in turn gave upward momentum to the yen. In morning trade, the dollar bought ¥106.74, against ¥107.39 in New York late Tuesday with the greenback also weighed by the prospect of interest rates being kept low until later in the year.
The euro was at ¥121.37 from ¥121.97.
The pound was flat against the dollar after recent volatility, with few traders able to gauge whether a June 23 referendum will result in Britain remaining in or leaving the European Union. Recent polls have shown momentum with the exit camp, fanning worries that such a decision will spur significant market turmoil and slow or stall the British economy. The World Bank issued a downbeat outlook on the global economy, slashing its forecast for 2016 growth to 2.4% this year, the same lethargic pace of last year and much slower than the 2.9% tipped in January.
The Bank cited a slower-than-expected rebound in advanced economies, which was holding back developed countries, with world trade and investment both depressed.
It also said there were doubts that the aggressive monetary easing in developed countries, with negative interest rates in several, is doing the intended job of firing up economic activity.
In Tokyo, the Nikkei 225 down 0.3% at 16,620.18 points; Shanghai - Composite down 0.7% at 2,915.99 points and Hong Kong - Hang Seng down 0.5% at 21,227.15 points at the close yesterday.