HONG KONG: Asian markets started the week cautiously on Monday following last week’s rally, with investors picking up some profits while oil ticked lower for a second session after breaking above $40.
After the turmoil that swept across global trading floors in the first two months of the year, some stability has returned and March saw a broad uptick, with last week’s Federal Reserve comments on lowering its rate hike forecast providing strong buying incentives.
However, analysts said markets were having trouble maintaining their rally while dealers have an eye on the long Easter break that starts Friday.
“We’re not seeing a lot of enthusiasm in markets given the holiday-shortened week and the strong rally that we’ve had recently,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told Bloomberg News.
“We need to see more catalysts for this rally to continue. We need to see some signs growth is stable.”
In early trade Shanghai surged 1.6 percent after Chinese authorities loosened ruled on margin trading—effectively borrowing cash to invest—for the first time since last summer’s collapse in mainland markets.
“The loosening could reignite interest in the equity market, particularly as the regulators’ actions last year—to rein back private sector broker leverage—helped trigger the correction in equity prices,” said Koon Chow, senior macro and currency strategist at Union Bancaire Privee in London.
Hong Kong rose 0.4 percent and Wellington added 0.1 percent. But Sydney shed 0.5 percent, Seoul was 0.1 percent off and Singapore shed one percent. Tokyo was closed for a public holiday.
Oil prices turned lower again, with US benchmark West Texas Intermediate 1.4 percent off and Brent down 0.8 percent.
The losses are the second in a row for crude, after last week busting above $40 a barrel on the back of hopes for an output freeze when key producers hold a meeting next month.
The dollar continued to struggle against the euro and yen after plunging last week in response to the Fed—citing weakness in the global economy—saying it would lower its outlook for hiking borrowing costs this year
The euro faced pressure after European Central Bank economist Peter Praet hinted at further interest rate cuts having last week slashed them further into negative territory in a bid to ramp up inflation and kickstart growth.
The dollar rose against most emerging market currencies, with the South Korean won down 0.2 percent, Indonesia’s rupiah 0.3 percent lower and Australian dollar down 0.2 percent.
The oil-linked Malaysian ringgit shed 0.5 percent and Singapore’s dollar dropped 0.2 percent.