HONG KONG: Asian stocks started the day in the red on Wednesday with Hong Kong seeing profit-taking after the previous day’s record close with energy firms hit by a dive in oil prices.
The dollar suffered fresh losses as a mild recovery Tuesday petered out, while bitcoin was also well down following what one analyst called a “cryptocalypse” that saw digital currencies take a hammering.
The dips across markets were in line with a sell-off on Wall Street, which returned from a long holiday weekend to political horse-trading as Washington lawmakers struggle to avert a crippling government shutdown.
While a deal to fund programmes is expected to be met by the Friday deadline the uncertainty provided an opportunity to cash in after all three main indexes hit peaks last week.
The retreat also comes after a blistering start to the year for equity traders, and Hartmut Issel, head of Asia Pacific equity and credit at UBS AG Wealth Management in Singapore, told Bloomberg Television: “It’s more of a healthy correction” in stocks.
“The last two and a half weeks have been very strong and in some cases we were really wondering if you extrapolate this another three or four weeks we would have exhausted the potential we saw for the entire year.”
Hong Kong eased 0.3 percent from its highest ever close, though analysts still expect the Hang Seng Index to resume its rally and eventually hit 34,000 by the end of the year.
Tokyo shed 0.4 percent by the break on a stronger yen, while Sydney also fell 0.4 percent, Singapore slipped 0.1 percent and Seoul fell 0.3 percent. However, Shanghai added 0.5 percent.
– Energy firms hit –
Among the big losers were energy firms after both main oil contracts sank more than one percent as expectations of falling US stockpiles were overshadowed by worries that Russia is considering ending its role in an output freeze with OPEC.
PetroChina and CNOOC in Hong Kong both lost more than two percent while Japan’s Inpex was almost three percent lower and Rio Tinto slumped 2.8 percent in Sydney.
On forex markets the dollar came back under pressure after recovering slightly Tuesday from recent losses, with the euro back around three-year highs.
“Expectations are increasing that other… central banks are readying to enter a path of interest rate normalisation, with the European Central Bank and Bank of Japan joining the (Federal Reserve) spearheading the shifting central bank narrative for 2018,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
However, bitcoin was down almost eight percent at $10,900, according to Bloomberg data, having slumped around 15 percent on Tuesday as the volatile cryptocurrency market continues to suffer broad losses.
The selling spread to other alternative digital units, with ethereum, ripple and litecoin all losing abut a quarter of their value Tuesday.
Bitcoin is down from record highs approaching $20,000 in the week before Christmas, having rocketed 25-fold over the year, hit by concerns about a bubble and speculation South Korea and China will ban its trading.
“It’s been a Cryptocalypse overnight with BTC and other virtual currencies coming under heavy selling pressure,” said Greg McKenna, chief market strategist at AxiTrader.
But Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, sounded a slightly positive note, saying: “Not all hope is lost. The cryptocurrency market is privy to these wild swings and seasoned veterans in this space have seen this happen many times previously.
“Not saying that it couldn’t be different this time but every major correction has been followed up by a rally more powerful than the last.”
Source: Brecorder.com
