Asia stocks drop after yen reaches new 15-year high

Asian stock markets slipped Thursday as investors digested the yen’s overnight climb to a new 15-year high against the dollar and a disappointing U.S. jobs report.

Oil, meanwhile, hovered above $83 a barrel as the weak U.S. dollar fuels gains in commodity prices. Gold hit a new high.

Japan’s Nikkei 225 stock average was down 21.31 points, or 0.2 percent, to 9,670.12. But it mostly held onto gains of more than 3 percent made over the last two days after the Bank of Japan cut interest rates to near zero and announced plans to establish an asset-buying fund.

Elsewhere, South Korea’s Kospi fell 0.2 percent to 1,900.43 and Australia’s S&P/ASX 200 was negligibly lower at 4,685.7. Hong Kong’s Hang Seng index was down 0.2 percent to 22,838.87.

Meanwhile, the dollar continued its slide, most notably against the yen and the euro. The euro jumped to an eight-month high against the dollar, and the yen hit a new 15-year high in New York on Wednesday before retreating slightly.

Gold reached another high as investors gauged whether individual countries — Japan, Thailand, Singapore and others — would take moves to stem the strength in their currencies against the U.S. dollar, analysts said.

“It’s a very edgy market,” said Tey Tze Ming, a trader at Saxo Capital Markets in Singapore. “Gold is being pushed to new highs because if the dollar starts weakening and the yen starts weakening, then there is really isn’t anything safe except gold.”

Ming said third quarter earnings season — which kicks off Thursday in the U.S. with Dow component Alcoa Inc. — might bring better results than expected, helping to lift markets in the short term.

But measures being contemplated by some countries — such as taking steps to soften a strong currency or placing limits on capital inflows — will stifle trading, he said.

The greenback’s malaise comes amid expectations that the U.S. Federal Reserve will take steps to support the U.S. economy by buying U.S. government debt. That would drive down long-term interest rates and trigger economic activity. But lower rates also mean that assets bought in dollars offer investors lower returns, dragging down the dollar as investors send funds to Asia and other regions with higher returns.

Ming said he did not expect overly dramatic moves from the Fed because that would be “taken by the markets as a vote of no confidence and will throw everything into a tailspin.”

In New York on Wednesday, the Dow Jones industrial average rose 0.2 percent to close at 10,967.65. But broader indexes retreated. The Standard & Poor’s 500 fell 0.1 percent to 1,159.97, while the Nasdaq composite index fell 0.8 percent to 2,380.66.

Payroll company ADP said private employers cut jobs in September for the first time in seven months. Another jobs report — the more important Labor Department jobs survey — is expected Friday.

In currencies, the dollar was trading at 82.84 yen, down from 82.96 yen late Wednesday. The euro was slightly higher, to $1.3918 from $1.3917.

Benchmark oil for November delivery was up 22 cents to $83.45 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 41 cents to settle at $83.23 on Wednesday.
Source: AP

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