Care gripped Asian markets on Tuesday, sending out the safe-haven yen scampering higher ahead of central bank conferences in the United States and Japan, while a fresh skid in oil moistened energy stocks. MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS was 0.2 percent firmer, still consolidating after just recently peaking at nine-month highs. Japan’s Nikkei.N225 dropped 1.5 percent, with financiers relatively unimpressed by a Nikkei report the federal government planned a direct fiscal stimulus of around 6 trillion yen ($ 56 billion) over the next couple of years. Not assisting was a broad rally in the yen, which saw the dollar and euro both lose 1 percent to 104.67 JPY= and 115.06 yen EURJPY= respectively. Dealers mentioned doubts the Bank of Japan would provide any significant new stimulus at its policy conference on Friday. “We believe they’ll provide a little everything, however not the bazooka some might be expecting,” stated Frederic Neumann, co-head of economics at HSBC in a note. Expanded asset purchases or a more rate cut into negative territory were possible, however the level of actual stimulus offered would depend upon how they were carried out.
In all, it’s a recipe for volatility. “Our recent discussions with financiers recommend that expectations are all over the location,” he added. “The BoJ might simply not do anything. In the age of shock and awe, that would definitely deliver lots of that.” Markets see practically no possibility of a hike by the Fed after its meeting on Wednesday, but are wary in case it acknowledges a current improvement in U.S. financial information in a way that adds to the risk of a relocation later on in the year.
Fed fund futures suggest a 56 percent chance of a rate trek in December, up from 48 percent on Friday. The uncertainty kept the dollar range-bound on the euro around $1.0990 EUR=. On the other hand, sterling took a knock when the Financial Times reported Martin Weale, a member of the Bank of England’s rate-setting committee, had actually dropped his opposition to an easing and now favoured immediate stimulus. The pound slipped to $1.3103 GBP=, from around $1.3140 late in New York, however has chart support in the $1.3060/ 76 zone.
On Wall Street, the Dow Jones Industrial Average.DJI had ended Monday with a mild loss of 0.42 percent, while the S&P 500. SPX dipped 0.3 percent and the Nasdaq.IXIC 0.05 percent. Apple (AAPL.O) shares fell 1.3 percent after BGC cut the stock to “offer” ahead of its profits report on Tuesday. In products, oil languished near three-month lows as an international glut of crude and fine-tuned products weighed on markets. NYMEX crude CLc1 was quoted 5 cents firmer at $43.15, after losing 2 percent overnight, while Brent LCOc1 added 13 cents to $44.85 a barrel. (Reporting by Wayne Cole; Editing by Sam Holmes).