HONG KONG: Asian shares turned lower Friday following losses in New York and Europe as traders fret over the state of the global economy, with potentially big market-moving events coming into focus.
After a healthy run of recent gains helped by rising oil prices, investors took a step back as the head of the European Central Bank (ECB) called for action to kick start eurozone growth — which was taken as a sign its own arsenal is running low.
Mario Draghi said the cost of delaying reforms would be “simply too high.”
His comments follow an indication from Federal Reserve boss Janet Yellen that it will likely not lift interest rates until the fourth quarter, while other central banks have either announced or are contemplating cuts.
Attention is now on next week’s policy meetings of the US and Japanese central banks.
The Bank of Japan earlier this year adopted a negative interest rate policy, following a similar move in 2015 by the ECB, in a bid to nurture investment. But the move has been criticized as being ineffective and some lenders say their bottom lines are being hit.
Also, there are fears that a British referendum on its European Union membership on June 23 will see a vote to leave, which many fear could unleash a wave of turmoil across world markets.
“The market is looking at a very small chance of the Fed moving next week,” Chris Green, the Auckland-based director of economics and strategy at First NZ Capital Group, told Bloomberg News.
“While that’s been supportive of risk assets, a delay in the Fed rate hike is also a reflection of weaker economic backdrop. Further weakness in US economic data along with the potential for (a British EU exit) would be a cause for concern.”
Japan’s Nikkei ended the morning session 0.5 percent lower, while Hong Kong was off 0.4 percent after returning from a one-day public holiday. Sydney shed one percent and Seoul was 0.4 percent lower, while there were also losses in Singapore and Wellington.
Oil prices drifted lower for a second day as investors booked profits from a recent surge that has seen the commodity touch 11-month highs.
In the morning West Texas Intermediate dipped 0.2 percent to $50.50, having Thursday hit its highest level since July. Brent was down 0.1 percent at $51.90.
However, with the dollar unlikely to pick up any time soon — which makes crude cheaper for holders of other currencies — analysts are tipping the black gold to break the $55 barrier soon.
Key figures around 0230 GMT
Tokyo – Nikkei 225: DOWN 0.5 percent at 15,586.71 (break)
Hong Kong – Hang Seng: DOWN 0.4 percent at 21,212.07
Shanghai – Composite: Closed for a public holiday
Euro/dollar: DOWN at $1.1300 from $1.1315 late Thursday
Dollar/yen: UP at 107.21 yen from 107.10 yen
Pound/dollar: UP at $1.4454 from $1.4453
New York – Dow: DOWN 0.1 percent at 17,985.19 (close)
London – FTSE 100: DOWN 1.1 percent at 6,231.89 (close)