INSUBCONTINENT EXCLUSIVE:
TOKYO: Asian shares took a breather on Thursday after an extended rally, as markets awaited more news on US-China trade talks that have
raised hopes of a deal to avert an all-out trade war between economic giants.
MSCI's broadest index of Asia-Pacific shares outside Japan
lost 0.2 per cent, reversing course after briefly touching a near four-week high early in session.
Australian shares eased 0.3 per cent,
while Japan's Nikkei was down 1.4 per cent by midday break.
Hong Kong's Hang Seng was off nearly half a per cent, while China's blue-chip
CSI 300 lost 0.1 per cent.
Wall Street's SP 500 rose 0.41 per cent on Wednesday, extending its gains from 20-month lows touched around
Christmas to more than 10 per cent.
Delegations from China and United States ended three days of trade talks in Beijing on Wednesday in
first face-to-face negotiations since both sides agreed a 90-day truce in a trade war that has disrupted flow of hundreds of billions of
dollars of goods.
China's commerce ministry said on Thursday that talks with United States this week were extensive, and helped establish a
foundation for resolution of each others' concerns.
However, there were few concrete details on meetings in Beijing, which were not at a
ministerial level, so were not expected to produce a deal to end trade war.
Risk assets extended a days-long rally overnight after minutes
from Fed's December meeting showed that many policymakers were of opinion they could be patient about future monetary tightening, and a few
did not support central bank's rate increase last month.
Not helping sentiment were figures out of China showing country's consumer prices
and factory-gate inflation both rose less than expected in December, with latter rising at slowest pace in over two years.
"Dovish Fed
minutes and positive developments out from US-China trade talks will likely keep risk rally going although some market players may opt to
book gains and to wait for fresh leads," ING economists said in a note to clients.
Besides dovish slant from minutes, a clutch of Fed
officials also said on Wednesday they will wait to deliver more interest rate hikes so central bank can further assess growing risks to an
otherwise solid US economic outlook.
"The financial markets had been pushing Federal Reserve to change their tune," said Chris Weston,
Melbourne-based head of research at foreign exchange brokerage Pepperstone.
"We've got that situation played out
The markets have had their day, they have pushed Federal Reserve to work towards a sort of concerted patience stance
Now we've got back to an equilibrium point."
The rally has gained traction since last Friday, when Federal Reserve Chairman Jerome Powell
said he was aware of risks to economy and would be patient and flexible in policy decisions this year.
E-Mini futures for SP 500 were last
down about half a per cent.
OIL EASES, DOLLAR PRESSURED
Oil also caught investors' attention after US crude and Brent jumped overnight,
helped by optimism over easing Sino-US trade tensions, while OPEC-led crude output cuts also provided support.
US West Texas Intermediate
crude futures on Wednesday gained almost 5.2 per cent, while Brent crude futures were up more than 4.6 per cent
The sharp gains extended a rally that has pushed futures up about 14 per cent this year.
Both crude futures gave up some of their recent
US crude was last trading 55 cents lower at $51.81 a barrel, down 1.05 per cent
Brent lost 50 cents to $60.94, off 0.81 per cent.
Pepperstone's Weston said he viewed more gains in oil prices as a key driver for any
further rise in risk appetite.
If US crude futures can break through $55 level, "you're going to see real yields probably lower
That's really good for cost of money and taking some further headwinds out of US dollar," he said.
US Treasury yields last stood at 2.696
per cent, down from 2.710 per cent at US close on Wednesday.
The dollar remained on defensive after hitting its lowest level since
mid-October amid signs Fed policymakers are becoming more cautious about future rate hikes and as investors unwound safe-haven bets due to
optimism over trade talks.
The greenback was down a tenth of a per cent against euro at $1.1553
The single currency gained 0.9 per cent against dollar during previous session, its biggest one-day gain since late June.
Against a basket
of six major rivals, dollar briefly dipped to 95.082, its lowest since Oct
17, and was last down 0.1 per cent.
The dollar lost nearly 0.2 per cent against yen, a safe-haven currency that's often preferred by traders
during times of market and economic stress.
The Canadian dollar retreated in line with oil prices, and last traded down 0.2 per cent at
It had risen to a five-week high during previous session.
The Bank of Canada held interest rates steady as expected on Wednesday but said
more increases would be necessary even though low oil prices and a weak housing market will harm economy in short term.
In commodity
markets, spot gold was 0.2 per cent higher at $1,295.40, trading not far off a near seven-month peak of $1.298,60 scaled on Friday
