Asia waits on Chinese news, sterling soars
Asian markets got off to a soggy start on Thursday as investors counted down to data on Chinese manufacturing, while diverging outlooks for interest rates sent the British pound soaring and tipped the Canadian dollar into a tailspin.
An indifferent session on Wall Street and a mixed run of U.S. corporate earnings sapped the energy from stocks. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2 per cent, while Australia's main index lost 0.4 per cent.
The Dow ended Wednesday down 0.25 per cent, while the S&P 500 added 0.06 per cent and the Nasdaq 0.41 per cent.
IBM missed revenue expectations for a fourth straight quarter, driving down shares of the world's largest technology services company by nearly 4 per cent, making them the biggest drag on the market.
Attention in Asia was on the HSBC China flash PMI for January at 0145 GMT, which will give an early hint on the health of its massive manufacturing sector.
The December survey disappointed with a reading of 50.5 and any further dip would be taken badly by markets.
Investors seem to have a "glass half empty" view of the Asian giant these days which is why a better-than-expected reading on economic growth released earlier in the week caused only a fleeting rally in markets.
Later Thursday, Europe has its own version of early PMIs along with a round of unemployment figures.
The Eurozone composite PMI is seen edging up to 52.4 in January, from 52.1, led mostly by strength in Germany while France could again lag behind.
In currencies, it was all about central bank expectations. Sterling surged after a sharp fall in UK unemployment stoked speculation the Bank of England would have to bring forward the day when it started hiking interest rates.
The euro duly fell to a one-year low against sterling of 81.81 pence, while the pound jumped over a cent on the U.S. dollar.
Across the pond, the Canadian dollar tumbled to a more than four-year low after the Bank of Canada said it was growing more concerned about low inflation, leaving the door wide open to a cut in interest rates.
The central bank also took a rhetorical razor to the Canadian dollar saying a weaker currency would be positive for both exports and inflation.
The stark contrast with the situation in the UK, saw the pound soar 1.8 per cent on the Canadian currency to the highest since mid-2009.
The U.S. dollar found some support from expectations the Federal Reserve will make another $10 billion cut to its monthly bond-buying program at its policy meeting next week.
The dollar was modestly firmer on the yen at 104.54, while the euro marked time at $1.3546.
In commodity markets, freezing temperatures in the U.S. Northeast drove up prices for natural gas and oil.
U.S. crude oil futures were at $96.63 a barrel early Thursday after jumping more than a dollar overnight. Brent oil for March delivery had ended up $1.35 at $108.08.
Gold lost ground after its repeated failure to break above key technical resistance at $1,260 an ounce prompted investors to take profits. Spot gold was off at $1,237.21 per ounce, leaving behind Monday's peak of $1,259.85.
Copyright: Thomson Reuters 2014
