HONG KONG: Asian stocks held near 1-1/2-year highs in
subdued early trade on Tuesday as a holiday in the United States left
investors with few catalysts, while the euro nursed overnight losses as
lingering concerns about the looming French election rattled its bonds.
Political concerns have been at the front and center of
investors' minds over the past week or so, with markets wary about the
outcome of the French elections in the wake of Brexit.
The premium investors demand to hold French bonds instead of
German debt rose to its highest since late 2012 after a poll showed the
far-right Marine Le Pen narrowing the gap with more centrist opponents.
MSCI's broadest index of Asia-Pacific shares outside Japan
was flat in opening trades on Tuesday and held below a 19-month peak hit
last Thursday. The index is up more than 11 percent since Dec. 23.
Australian stocks were down with investors watching first
half results from the world's biggest miner by market value, BHP
Billiton later in the day. The company has been struggling to find a way
forward after a 12-day strike at its Chilean copper mine Escondida.
In currency markets, the euro eased to US$1.06090 , having moved
little on Monday, due partly to the absence of U.S. investors because of
a holiday. It has fallen 1.75 percent so far this month.
Against the yen, the euro traded at 120.15 yen , off from lows of 119.65 yen on Monday.
The latest French poll overshadowed optimism that Greece may avert
another crisis after a government official said the country had agreed
with euro zone finance ministers to resume no resume negotiations over
its bailout review.
Fears that cooperation on the left could lead to a run-off between
Socialist candidate Benoit Hamon or hard-left candidate Jean-Luc
Melenchon and Le Pen, eliminating three main moderate candidates, have
dogged the euro since Friday when the two leftists said they were
discussing such cooperation.
In a morning note, ANZ strategists noted that widening European bond
spreads represented a tightening in financial conditions at a time when
the European central bank is low on fire-power.
Oil prices were broadly steady after having suffered the first weekly
decline in five weeks as the market weighed rising U.S. drilling and
record stockpiles against efforts by major producers to cut output to
reduce a global glut.
Brent futures were steady at US$56.18 a barrel, while U.S. West Texas
Intermediate crude for April delivery added 0.4 percent to US$53.60 a
barrel.
(Editing by Shri Navaratnam)
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