HONG KONG: Asian stocks turned negative Friday and oil prices retreated along with the dollar as investors took a step back from a recent rally, while caution set in ahead of a crunch referendum in Italy at the weekend.
World markets have been rising since Donald Trump’s shock US election win on hopes his big-spending, tax-cutting policies will boost the world’s largest economy.
The advance was given extra impetus Wednesday when OPEC agreed on a plan to cut oil production, sending prices soaring.
But James Woods, global investment analyst at Rivkin Securities in Sydney, told Bloomberg News: “Markets
have rallied pretty strongly and we had three fantastic weeks but buying pressure certainly looks exhausted.
“We will see some corrective declines and profit taking.”
Japan’s Nikkei, which on Thursday closed at its highest level this year, slipped 0.5 percent, while Hong Kong gave up 1.4 percent and Shanghai slipped 0.9 percent.
Sydney fell one percent and Seoul shed 0.7 percent, while Singapore gave back 0.3 percent. Wellington and Taipei were also down.
In early European trade London fell 0.8 percent, Frankfurt shed 0.9 percent and Paris slipped 0.7 percent.
Japanese exporters retreated on the back of a strengthening yen. In afternoon trade the dollar bought 114.05 yen, having flirted with 115 yen earlier this week, which was a nine-month high.
On oil markets both main contracts dipped marginally after racking up double-digit gains in the previous two days in reaction to OPEC’s output-cutting deal.
Traders are now awaiting key events at the weekend. On Friday the US releases its November jobs report, which could give an indication of the Federal Reserve’s plans for interest rates over the next year.
And on Sunday Italy goes to the polls for a constitutional referendum, with Prime Minister Matteo Renzi saying he will resign if his government loses, leading to a possible general election.
While experts say the chances of a Eurosceptic party gaining power is low, there are worries about the uncertainty it could create in one of the EU’s biggest economies.
Also Sunday Austrians will vote for a new president, with Norbert Hofer seeking to become Europe’s first far-right president since 1945.
While the post is largely ceremonial, a win for Hofer would be a major symbolic victory for populists — many of whom are anti-EU — across Europe ahead of several elections in 2017.
Key figures around 0800 GMT (4 p.m.) Friday
Tokyo – Nikkei 225: DOWN 0.5 percent at 18,426.08 (close)
Hong Kong – Hang Seng: DOWN 1.4 percent at 22,564.82 (close)
Shanghai – Composite: DOWN 0.9 percent at 3,243.84 (close)
London – FTSE 100: DOWN 0.8 percent at 6,701.97
Euro/dollar: UP at $1.0680 from $1.0661 Thursday
Dollar/yen: DOWN at 114.05 yen from 114.11 yen
Pound/dollar: UP at $1.2633 from $1.2591
Oil – West Texas Intermediate: DOWN 16 cents at $50.90 per barrel
Oil – Brent North Sea: DOWN 41 cents at $53.53 per barrel
New York – Dow: UP 0.4 percent at 19,191.93 (close) AFP