Asian Shares Skid, but Dollar Finds Some Traction
February 4, 2014 2:47 PM EST
Asian shares tumbled on Tuesday though the dollar regained some footing, after disappointing U.S. manufacturing data cast a pall over Wall Street and gave investors little reason to hope for stability in emerging markets after their recent rout.
A man using a mobile phone is reflected on an electronic monitor displaying share prices at a brokerage in Tokyo September 7, 2012.
MSCI's broadest index of Asia-Pacific shares outside Japan fell about 1.4 percent at its lowest level since early September.
Japan's Nikkei stock average lost 2.9 percent, extending its declines into a fourth session.
But the greenback's descent took a breather, with the dollar index gaining 0.1 percent to 81.101.
Data showing U.S. manufacturing activity slowed sharply last month dealt a heavy blow to markets already worried that the U.S. Federal Reserve's decision to taper its asset purchases would lead to capital flight from emerging markets.
"Investors should steer clear of risk assets over the short term as the turmoil does not look like it will be over anytime soon," Mitul Kotecha, the Hong Kong-based head of global foreign exchange strategy for Credit Agricole, said in a note to clients.
"A combination of tapering, a confluence of country- specific emerging market concerns and weaker growth in China provide the backdrop for a volatile few weeks if not longer, ahead," Kotecha added.
The yield on benchmark 10-year U.S. Treasury notes stood at 2.587 in Asian trading, after falling as low as 2.582 percent on Monday, the lowest since November 1.
January's sharp fall in U.S. output activity came on the back of the biggest drop in new orders in 33 years, while construction spending barely rose in December, suggesting the U.S. economic recovery is more tenuous than some investors had believed.
The data helped launch the benchmark S&P 500 index on its worst single-day drop in seven months, while the CBOE volatility index soared 16.5 percent to close at its highest level since December 2012.
That helped send the dollar as low as 100.77 yen and the euro as low as 136.37 yen, levels neither pair had touched since late November.
In Asian trading, the dollar took back some lost ground, adding about 0.3 percent to buy 101.24 yen, while the euro rose 0.2 percent on the day to 136.84 yen.
The Australian dollar was slightly lower at $0.8738, as investors awaited the Reserve Bank of Australia's policy decision due at 0330 GMT.
All analysts polled by Reuters expected the RBA to keep its 2.5 percent cash rate intact, although some said the central bank might drop its easing bias.
On the commodities front, U.S. oil edged up slightly to $96.53 a barrel, after plunging $1.09 on Monday as the weaker-than-expected U.S. factory data fanned fears about demand in the world's largest economy.
The stock market selloff added to the safe-haven appeal of gold, with spot gold edging up to $1,258.84 an ounce, after gaining 1.1 percent on Monday.
Most Popular Slideshows
- 2014 MLB World Series Game 1: San Francisco Giants 7, Kansas City Royals 1 [PHOTOS]
- 2014 MLB World Series - Game 2: Kansas City Royals 7, San Francisco Giants 2 [PHOTOS]
- NFL Thursday Recap - Denver Broncos 35, San Diego Chargers 21: Peyton Manning Has 3 TDs In Easy Win [PHOTOS]
- Gennady Golovkin Next Fight Options: Canelo Alvarez, Miguel Cotto Or Julio Cesar Chavez Jr.
Join the Conversation
- Economic Growth In US And Sub-Saharan Africa Allay 2015 Recession Fears
- Travel Alert: Over 200 Canadians Infected with Mosquito-Borne Chikungunya Virus
- Canadian Ebola Drug: Tekmira Firm Starts Limited Manufacturing of Vaccine, Available By December; Shares Up
- US Dedicates 5 Airports for Travellers From Ebola-Stricken Nations, Lawmakers Want Travel Ban
- Australia's Low Birth Rate May Be Due to Low Confidence in Economy
- Xiaomi Redmi 1S vs. Sharp Aquos Crystal – Specifications, Features And Price Showdown
- ASUS Releases A Teaser Indicating The Arrival of New Zenfone and ZenWatch On October 28
- Boy Stoned To Death For Alleged Rape, Victim Receives Dowry From Militants
- Verizon Motorola Droid Turbo Leaked Live Images Surfaces, Scheduled To Get Unveiled On Oct 28
- Update HTC One M7 with LG G2 with Android 4.4.2 as Sprint OTA: Fixes and Installation
- Three Dual SIM Samsung Galaxy Note 4 Duos Variants Comes To China
- Russia is Creating Underwater Combat Robots to Protect its Arctic Territories