Asian markets slip after ECB expectations fall short

Asian markets slip after ECB expectations fall short. Shares in Asia were down on Friday, after inaction by the European Central Bank popped investor exuberance of a global central bank easing.

Japan’s Nikkei Stock Average NIK, -1.09%   fell 0.9% even as the yen was nearly unchanged against the dollar after gaining in early trade. Elsewhere, Australia’s S&P/ASX 200 XJO, -0.26%   fell 0.3%, South Korea’s Kospi SEU, -0.09%   traded flat and Hong Kong’s Hang Seng Index HSI, -0.26%   was down 0.5%. China’s Shanghai Composite SHCOMP, -0.94%   was also down 0.4%.

“Markets had built up some positive expectations from (the Bank of Japan) and ECB,” said Khiem Do, head of Asian Multi Asset at Baring Asset Management. Market disappointment over the ECB pause reflected in the fall of the Nikkei, he said.

However, Asian markets remain attractive to Western investors, helping limit the stock declines on Friday, he said. “Investors realize that the Brexit event has passed and global investors are looking for alternatives to the U.K. and Europe.”

On Thursday, the ECB stopped short of pledging fresh stimulus for the eurozone economy, leaving interest rates on hold in its first policy meeting since the Brexit vote.

ECB Governor Mario Draghi said it was too early to determine the economic fallout of the U.K. referendum, stressing that financial markets had shown “encouraging resilience.”

Closer to home, the dollar-yen pair broke below the key 106.50 level, consolidating on the downside after Bank of Japan Governor Haruhiko Kuroda’s remarks that there was no need and no possibility of helicopter money, or ultra-aggressive easing measures.

Those comments were aired by the British Broadcasting Corp. this week but the interview itself was taped in mid-June. The Nikkei opened Thursday with a 1.2% drop.

Nonetheless, the declines narrowed after Japan’s Nikkei Asian Review reported that the government’s stimulus package could reach 30 trillion yen ($283.58 billion), with other off-budget measures, according to unnamed officials.

Shares in McDonald’s Holdings Company Japan Ltd. 2702, +4.17%   surged 8.2% after the Pokémon Go service launched in Japan. McDonald’s in Japan is tying up with the popular smartphone game. Nintendo Co. 7974, +0.79%  , which has a major stake in the Pokémon franchise, was up 4.4%.

In China, the benchmark Shanghai Composite Index fell even as the yuan was pegged 0.3% higher against the U.S. dollar. The magnitude of the yuan’s strengthening was the biggest in three weeks.

Among the region’s other currencies, the Malaysian ringgit fell against the dollar for a second straight day, and was recently down 0.6%, while other currencies held steady.

The ringgit’s depreciation comes on the heels of the U.S. Department of Justice and authorities in Singapore seizing assets related to alleged money laundering by parties involved with 1MDB, Malaysia’s state investment firm.

 

Source: Market Watch

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