Asian stocks were mixed on Thursday as shares in Tokyo closed lower on poor machinery orders, while shares in China surged by almost 3% as trading resumed after a week-long holiday. Core machinery orders in Japan plunged by 5.7% month-on-month in August after falling 3.6% the previous month. The figure was sharply below estimates of a 3.3% rise. The data cast doubt on the Bank of Japan’s upbeat message on economic growth following its policy meeting yesterday and kept alive hopes of further monetary stimulus in the coming months. Current account data was more positive though as Japan posted a surplus for the 14th month in-a-row.
The dollar slipped against the yen in today’s Asian session, falling to 119.86 from an earlier high of 120.10 yen. The euro was stuck in a tight range against the dollar and was last trading at 1.1253 dollars. It was also steady against the pound at 0.7350. Meanwhile, sterling held on to yesterday’s gains against the dollar after rallying on strong industrial production data, and was trading at 1.5315 dollars in late Asian session.
Worse-than-expected German trade figures had limited impact on the euro despite exports in Germany posting their biggest fall since 2009 at the height of the recession. German exports fell by 5.2% in August after rising by a downwardly revised 2.2% in July. Expectations were for a 0.9% drop. Imports also fell but by a slower pace, causing a deterioration in Germany’s monthly trade surplus. The drop in exports could be a sign that the slowdown in China is staring to hurt demand for overseas manufactured goods.
Oil prices rebounded on Thursday after its three-day rally came to a halt on Wednesday. A rise in US crude oil inventories failed to deter oil bulls as US oil futures rose 0.5% to $48.05 in today’s Asian session.
Coming up later today, the Bank of England’s monetary policy decision and the meeting minutes will be the main focus in European session. No change in rates is expected but the minutes could provide clues on how the MPC’s outlook has been affected by the recent global developments. In the US session, initial weekly jobless claims will be interesting to watch following last week’s poor jobs data but attention is likely to shift to the publication of the FOMC minutes from the Fed’s September meeting. Investors will be looking for clues on the likelihood of a rate rise later this year.