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Market Review: Asian Shares Stumbled Friday

Published 01/17/2015, 09:58 PM
Updated 07/09/2023, 06:31 AM

Asian shares stumbled on Friday and the dollar skidded against the safe-haven yen, after Switzerland's unexpected move to abandon its currency cap jolted markets already roiled by plunging commodities prices. Japan's Nikkei share average fell 2.3 percent on Friday morning. By mid- morning trade, the Nikkei was at 16,711.26, nearing a one-month low of 16,672.94 hit on Dec. 17. For the week, the benchmark has fallen 2.8 percent.

South Korean shares were nursing hefty losses as a whirlwind of volatility swept across the global financial markets after Switzerland unexpectedly dropped its exchange rate ceiling against the euro on Thursday.

Bucking the trend, China stocks climbed higher on Friday as gains on Shenzhen's ChiNext Composite, focused on small cap and tech stocks, outstripped blue chip heavy Shanghai. While, Hong Kong shares drifted downward on Friday as losses on Wall Street spread to Asia.The Hang Seng index fell 1.0 percent, to 24,103.52, while the China Enterprises Index lost 0.9 percent, to 12,076.74 points.

European equities closed mostly higher on Friday, but Swiss stocks weighed on wider benchmarks. The pan-European Euro Stoxx 600 Index closed higher on Friday. The Swiss National Bank (SNB)'s abandonment of its currency cap on the euro boosted risk sentiment in Europe ex-Switzerland, as it has added to hopes that the European Central Bank could announce more stimulus measures next week.

"After the SNB caused a spasm across all markets and assets yesterday, traders have come to the conclusion that the SNB capitulated in the face of overwhelming ECB action next week," Marius Paun and Jonathan Sudaria, two dealers at Capital Spreads, said in a note. However, the Swiss benchmark stock index closed over 5 percent lower on Friday, with a stronger currency making a country's exports more expensive. All stocks on the index closed lower, with Julius Baer the worst hit, falling by more than 15 percent. Also lower were watchmaker Swatch(SIX:UHR), chocolate maker Nestle (SIX:NESN), banks UBS (SIX:UBSN) and Credit Suisse Group (SIX:CSGN) and insurers Swiss Re (SIX:SRENH) and Zurich Insurance (SIX:ZURN). Swiss bonds also rose on Friday, pushing the 10-Year government bond yield into negative territory for the first time, according to Reuters.

Greek stocks also closed lower, as concerns about the upcoming national election continued to weigh. In other stocks news, BP Plc (LONDON:BP) shares closed over 5 percent higher after a ruling by U.S. District Court said that the supermajor's Gulf oil spill was smaller than first feared. The stock was also boosted by gains in crude oil prices. Meanwhile, France's Carrefour closed more than 4 percent higher after it published solid fourth-quarter sales on Friday.

US and Global.
Wall Street stocks rebounded on Friday on signs the U.S. economy was on track for solid growth with consumer sentiment hitting an 11-year high, while the euro slid further against the dollar a day after Switzerland ditched its currency cap.

Crude prices rallied on the U.S. sentiment report and after the International Energy Agency said lower prices had begun to curb production in some areas, including North America. The IEA said prices might fall further, but "signs are mounting that the tide will turn."
Wall Street surged at the close. Major U.S. indexes rose more than 1 percent in what Ken Polcari, director of the NYSE floor division of O'Neil Securities in New York, said had the makings of a relief rally.
The University of Michigan said U.S. consumer sentiment rose in January on employment and income gains, with spending power boosted by sliding gasoline prices.

The "outstanding" report countered fears that tumbling oil prices would curb growth, said Phil Orlando, chief equity strategist at Federated Investors in New York. He said cheaper energy will boost discretionary spending, and added that a disappointing retail sales report this week excluded online sales and gift cards and was skewered by seasonal factors.

The Dow Jones industrial average closed up 190.86 points, or 1.1 percent, at 17,511.57. The S&P 500 rose 26.75 points, or 1.34 percent, to 2,019.42 and the Nasdaq Composite added 63.56 points, or 1.39 percent, to 4,634.38.

The day after the euro lost Swiss support, the single currency slid to $1.1461, its weakest since November 2003. It last traded at $1.1567, down 0.52 percent. Against the yen, the dollar was up 1.23 percent at 117.59 yen. U.S. Treasuries prices fell after the strong consumer sentiment and tame inflation reports sparked profit-taking on recent gains. The U.S. 10-Year Treasury note fell 15/32 in price, pushing the yield up to 1.8257 percent. Brent crude futures for March delivery rose $1.90 to settle at $50.17 a barrel. U.S. crude settled up $2.44 at $48.69 a barrel.

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