Asian shares reverse early losses, the euro falls to a one-week low

Asian shares reverse early losses, the euro falls to a one-week low

Asian shares canceled early gains on Thursday in the face of increasing uncertainty about Sino-U.S. relationships. The euro reached a one-week low as traders wagered central bank action to curb the single currency.

In early European trade, Euro Stoxx 50 futures and German DAX futures added 0.6 percent each. FTSE futures increased by 0.2 percent, while {167’s CACAC 40 futures increased by 0.4 percent.

U.S. stock futures, the S&P 500 e-minis, were down 0.3 per cent.

MSCI’s largest Asian Pacific shares index outside Japan rose more than 0.5 percent earlier in the day. But then slipped at a rate of 0.1 percent, with Chinese and Hong Kong shares contributing to losses.

Hang Seng dropped by 0.7%, while China’s blue-chip index fell by 0.5%.

Bloomberg’s news report that China is making dramatic policy reforms to its semiconductor industry to tackle U.S. Restrictions has fueled global worries about worsening ties between the world’s two largest economies. China planned a package of initiatives to improve science, education, and funding for the chip industry as part of its five-year plan next month.

The move comes after the United States announced on Wednesday that it will now require senior Chinese diplomats to seek permission from the State Department before visiting U.S. university campuses or conducting cultural activities of more than 50 people outside mission grounds.

Fears of more escalating tensions overshadowed optimistic data showing that China’s service sector activity rose for the fourth straight month in August to remain above the 50-point level.

Elsewhere, Australia’s S&P / ASX 200 increased by 0.9 percent and Japan’s Nikkei by 0.9 percent. While South Korea’s KOSPI index increased by 1.2 percent.

By Swati Pandey

Although analysts generally expect stock markets to grow further, powered by significant central bank support, they warned against increasing risks.

“I think we are now at a stage where, tactically speaking, it makes sense to be more cautious than two or three months ago. As there is still a range of major risks that investors have to face,” said Scott Berg, T’s portfolio manager. Rowe Price’s plan for global growth in equity.

“The economic recovery remains weak, and there is still significant uncertainty about the growth trajectory beyond the initial rebound period,” Berg said.

U.S.-China Tensions and US presidential elections were other major threats. With a Democratic win, undoubtedly seeing a “significant change in policy direction and a new regulatory and tax regime,” he added.

On Wall Street overnight, the three key equity indices pushed higher with gains led by protective sectors, like utilities, as the high-volume tech market paused.

Wednesday’s data shows that U.S. private employers recruited fewer employees than anticipated for a second straight month in August. This indicates that the labor market’s recovery was slowing.

A separate report showed that factory orders increased more than anticipated in July, suggesting continued progress in the manufacturing sector.

In currencies, the euro fell by 0.4% to $1.1803 after the Financial Times reported that some members of the European Central Bank’s (ECB) Board of Directors were worried that the euro’s increase could affect the region’s growth.

That was followed by remarks on Tuesday by the Chief Economist of the ECB, Philip Lane, who said the exchange “does matter” for monetary policy when the euro’s fall had begun from over $1.20.

Westpac currency strategist Sean Callow said the FT study was “at least raising some interest in next week’s ECB conference.”

The dollar rose to 0.3 percent against the currency basket. It was marginally higher at 106.25 on the safe haven of the Japanese yen.

U.S. crude slipped 0.2% to $41.42 per barrel in commodities. Brent’s crude oil fell to $44.27 per barrel. Gold was marginally lower, with a spot price of $1933.98 an ounce.