Asian shares slip in holiday-thinned trade, focus turns to U.S. data

EghtesadOnline: Asian shares struggled on Thursday after a lacklustre performance on Wall Street as investors looked to U.S. economic data later in the day for potential catalysts, as markets wind down ahead of the holidays.

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22 December 2016

The subdued mood was expected to carry over into European trading. Britain's FTSE 100 index could edge down 0.1-0.2 percent, based on last prices for futures on the index. Spreadbetter IG predicted Germany's DAX would open 0.2 percent lower.

According to Reuters, MSCI's broadest index of Asia-Pacific shares outside Japan erased early modest gains and slipped 0.5 percent, while Japan's Nikkei stock index finished 0.1 percent lower, edging down from this week's one-year highs.

Hong Kong's Hang Seng index was down 0.7 percent after touching its lowest levels since July, though Australian shares ended up 0.5 percent, extending gains into a fourth straight session.

U.S. stocks, which have been on a tear since the Nov. 8 election on bets that the incoming administration of Donald Trump will embark on growth-stimulating policies, pulled back from the record highs logged in the previous session.

"There weren't any major market-making data points coming out, and I think that's why the markets are kind of taking a breather," said Jennifer Vail, head of fixed income research at U.S. Bank Wealth Management in Portland, Oregon.

Later on Thursday, the United States will release a third revision of U.S. third quarter gross domestic product.

"It could be a volatile day if it comes in either substantially stronger or substantially weaker," she said.

Durable goods orders for November and weekly initial jobless claims were also scheduled to be released.

Thin liquidity could also amplify moves, with many investors already departing ahead of this weekend's Christmas holiday. Markets in Tokyo will be closed on Friday for the Japanese Emperor's birthday.

The dollar edged up 0.1 percent against its Japanese counterpart to 117.67 yen, but remained shy of its 10-1/2-month high of 118.66 touched on Dec 15.

Japan's cabinet approved on Thursday a record $830 billion spending budget for fiscal 2017 that counts on low interest rates and a weak yen to limit borrowing, underscoring the challenge Tokyo faces in curbing the industrial world's heaviest debt burden.

The euro was up 0.2 percent at $1.0439, not far from Tuesday's low of $1.0352, which was the single currency's deepest nadir since January 2003 as it came under pressure from the ascendant dollar and fears over Italy's bank crunch.

Troubled bank Monte dei Paschi di Siena expects to burn through around 11 billion euros of liquidity more quickly than previously forecast, an updated document on the bank's website showed on Wednesday.

The dollar index, which tracks the greenback against a basket of six rival currencies, slipped 0.1 percent to 102.960, as investors stepped back after its rise to a 14-year peak of 103.650 earlier this week.

"There's a lot of year-end book-closing and position-squaring, and less in terms of data and events to go on," said Mitul Kotecha, head of FX strategy at Asia-Pacific for Barclays in Singapore.

"So all of that suggests we might see more consolidation going through the year-end," he said.

Crude oil prices erased earlier gains, facing pressure from a report showing a surprise build in U.S. crude inventories last week, as well as news that Libya expects to boost production over the next few months.

The contract roll on Wednesday for front-month U.S. crude to the higher-priced February from lower-priced January pushed U.S. crude up about 0.5 percent. But it was last down 0.1 percent at $52.44 per barrel. Brent crude fell 0.1 percent to $54.43.

Spot gold edged down 0.1 percent to $1,130.44 an ounce, though its losses were limited as the U.S. dollar retreated from this week's highs.