© AFP/File | A stronger yen tends to make Japanese stocks less desirable
After a burst of enthusiasm on the back of the US central bank’s decision to keep interest rates on hold for a bit longer, equities had begun giving up some of their gains on Friday, moving back from 14-month highs in Asia.
The stay of execution for easy money served also to bolster the Japanese yen, knocking some of the stuffing out of Tokyo on Monday, while other major indices also headed downwards.
A stronger yen tends to make Japanese stocks less desirable.
Uneasiness over oil was also dampening enthusiasm, ahead of a meeting of the Organization of Petroleum Exporting Countries (OPEC) this week.
“Oil spot prices will have a big influence on where equities markets are going to trade for the early part of the week,” said Angus Nicholson, a Melbourne-based analyst at IG Ltd.
“There are uncertainties over whether the OPEC members can reach an agreement,” he told Bloomberg News.
Two years of oversupply and OPEC’s failure to come to any kind of consensus on how to deal with it have left observers sceptical of any change in direction when players meet in Algeria on Wednesday.
Tokyo’s Nikkei was down 0.8 percent by the break, while Hong Kong’s major Hang Seng index had lost 0.7 percent by mid-morning.
Shanghai dropped 0.2 percent, Sydney was off 0.3 percent, Taiwan shed 0.7 percent and Seoul lost 0.3 percent.
On Friday the Dow slid 0.7 percent, while the tech-rich NASDAQ gave up 0.6 percent, with shares in Apple and Yahoo leading the downhill charge.
Frankfurt and Paris each lost around half a percent in value, while London held steady.
The yen was on a roll, with currency traders apparently emboldened by last week’s Bank of Japan move to target 10-year government bonds in its latest bid to provoke inflation.
The dollar was buying 100.81 yen in early Asian trade against 101.02 yen in New York on Friday.
“The Bank of Japan has lost control of the yen,” said Matthew Sherwood, head of investment strategy in Sydney at Perpetual Ltd.
“The only hope for Japan and the yen may be an aggressive Fed, but this is looking next to impossible despite an apparent split in the Fed Open Market Committee.”
On oil markets, US benchmark West Texas Intermediate for November delivery was up 26 cents to $44.74 while Brent crude gained 30 cents to $46.19.
– Key figures around 0300 GMT –
Tokyo – Nikkei 225: DOWN 0.8 percent at 16,612.57 (break)
Hong Kong – Hang Seng: DOWN 0.7 percent at 23,533.52
Shanghai – Composite: DOWN 0.6 percent at 3,015.46
Euro/dollar: UP at $1.1236 from $1.1128 late Friday
Dollar/yen: DOWN at 100.81 yen from 101.02 yen
Pound/dollar: UP at $1.2978 from $1.2972
New York – DOW: DOWN 0.7 percent at 18,261.45 (close)
London – FTSE 100: FLAT at 6,909.43 (close)
Tags: Angus Nicholson, Asian markets, Bank of Japan, easy money, Fed Open Market Committee, Fed-inspired rally, Federal Reserve, FTSE 100, Hang Seng Index, Interest Rates, Japan, Nikkei 225, oil, OPEC, Shanghai Composite