Equities slide on China’s trade data

Filomena Scalise

Filomena Scalise

Published Mar 10, 2014

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Tokyo - Asian stocks slid on Monday and the dollar stepped back from its recent highs as disappointing Chinese trade data and uncertainty over the crisis in Ukraine kept risk appetite in check.

Investors greeted the new week in Asia on a cautious note after data issued on Saturday showed China's exports unexpectedly tumbled in February, swinging the trade balance into deficit and adding to fears of a slowdown in the world's second-largest economy.

The soft Chinese data put a damper on risk sentiment, which had been temporarily boosted by stronger-than-expected US nonfarm payrolls out on Friday showing employers had added 175 000 jobs to their payrolls last month, up from 129 000 new positions in January.

“While non-farm payrolls surprised significantly to the upside on Friday, disappointing China data, escalating Russia/Ukraine concerns and the missing Malaysian aircraft have all contributed to a sombre mood,” IG market strategist Stan Shamu wrote in a note to clients.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.1 percent, and Tokyo's Nikkei stock average shed 1 percent, retreating from Friday's six-week high.

US stock futures fell 0.3 percent from their record closing high on Friday.

“Fundamentally speaking, data out of the US has a bigger underlying market impact, but the psychological effect from Chinese economic indicators cannot be overlooked. The Nikkei's attempt to chase further highs being derailed is a prime example,” said Koji Fukaya, president at FPG Securities in Tokyo.

“The rise in yields after the upbeat US data supports the dollar, but latest indicators out of China dampens risk appetite and may foil the currency's advances against the yen,” Fukaya said.

Russian forces tightened their grip on Crimea, seizing another border post and a military airfield, fanning tensions ahead of a planned Moscow-backed referendum on Sunday on whether the Black Sea peninsula should join Russia.

Diplomatic efforts to cool the crisis in Ukraine calmed markets toward the end of last week, but rising tensions over Russia's intervention in Crimea have kept investors on edge.

Meanwhile, a Malaysia Airlines flight with 239 people on board vanished en route to Beijing from Kuala Lumpur in the early hours of Saturday, with questions mounting over possible security lapses and whether a bomb or hijacking could have brought down the plane.

The US dollar index, a composite of six currency pairs dipped 0.1 percent to 79.682 after touching a high of 79.847 on Friday after the US jobs data.

Against the safe haven yen the dollar stood at 103.08, pulling away from a six-week high of 103.77 hit on Friday.

The euro remained near recent highs, with bulls still heartened by the European Central Bank's reluctance last week to take further policy action.

The single currency traded at $1.3886, within striking distance of a 2-1/2 year peak of $1.3915 reached on Friday.

The Australian dollar, usually used as a liquid proxy for China plays, fell in the wake of the soft Chinese data. It dropped to $0.9043 from $0.9065 late on Friday.

China's yuan opened trade at 6.1554 per dollar on Monday, down 0.5 percent from Friday's close of 6.1260.

Gold edged lower for a second straight session on Monday after the strong US jobs data eased fears of an economic slowdown and dimmed the metal's safe-haven appeal.

But underlining the fact that the crisis in the Ukraine was likely to remain a key theme for the precious metal, data from the Commodity Futures Trading showed that hedge funds and money managers raised their bullish bets in gold futures and options for a fourth consecutive week as geopolitical tensions boosted speculative interest to its highest in more than a year.

In wake of disappointing Chinese data, Brent crude declined 34 cents to $108.66 a barrel, ending two straight days of gains. Geopolitical tensions in Ukraine and Libya limited the falls. - Reuters

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