Daily Times

Asian markets dropped Monday, following Wall Street’s downbeat finish last week on fears that US economic growth has peaked, and with investors cautious ahead of key central bank meetings.

Trading was sluggish after investors reacted poorly to data showing the US economy expanded at an annual rate of 4.1 percent in the second quarter

While the rise matched analyst expectations and was hailed by US President Donald Trump, investors were unimpressed, sending stocks lower on a sense that the figures represent a peak.

Sentiment was also muted Monday ahead of several key central bank meetings, including in Tokyo, where the Bank of Japan began two days of talks.

“Lacklustre trading continued as investors want to know the results of Japanese and US central bankers’ policy decisions,” Yoshihiro Ito, chief strategist at Okasan Online Securities, said in a commentary.

There has been widespread speculation about whether Japan’s central bank may be looking to alter its ultra-loose monetary policy.

Reports earlier this month suggested minor changes were possible in the bank’s bond-buying programme, as it seeks to offset its effects on the banking sector.

The BoJ has engaged in massive bond-buying as part of a programme to push the country’s inflation rate up to 2.0 percent, seen as necessary to turbocharge the world’s third-largest economy.

But the goal has proved stubbornly elusive and experts said the BoJ might reset expectations on when it could be achieved, with local media reporting inflation forecasts would be lowered.

Japan’s benchmark Nikkei 225 index ended down 0.74 percent at 22,544.84, while the broader Topix index slipped 0.43 percent to 1,768.15. China’s stock markets also closed lower, with the tech-heavy Shenzhen index leading the losses.

The benchmark Shanghai Composite Index eased 0.16 percent to 2,869.05, while the Shenzhen Composite Index, which tracks stocks on China’s second exchange, fell 1.39 percent.

“The quite significant loss on the Nasdaq last week had a big impact on Chinese stocks, especially for the technology and innovation shares listed in Shenzhen,” said Zhang Yanbing, an analyst at Zheshang Securities. “But Shanghai stocks are doing alright, with the recent reform policies on state-owned enterprises,” Zhang added.

China announced last week plans to spur growth through fiscal policy and other steps to shield the world’s second-largest economy from the worsening trade row with the United States. Markets were down elsewhere in the region, including Hong Kong, Seoul and Sydney, where the benchmark S&P/ASX 200 fell 21.8 points, or 0.35 percent, to close at 6,278.4.

And European markets also dipped at the open, with London’s FTSE down 0.4 percent at 7,670.50.

In currency trading, the dollar was rangebound with the focus on monetary policy meetings by the BoJ and the Federal Reserve.

“It’s going to be a ‘central-bank’ week… and the market is paying close attention to the BoJ,” said Masakazu Satou, senior analyst at Gaiame Online.

“I don’t think the BoJ will change its policy dramatically, but it may send a message indicating its willingness to mitigate the negative impact of the current policy,” Satou told AFP.

Key figures

Tokyo – Nikkei 225: DOWN 0.74 percent at 22,544.84 (close)

Hong Kong – Hang Seng: DOWN 0.37 percent at 28,697.45

Shanghai – Composite: DOWN 0.16 percent at 2,869.05(close)

London – FTSE 100: DOWN 0.4 percent at 7,670.50 (open)

Euro/dollar: UP at $1.1669 from $1.1653

Pound/dollar: UP at $1.3131 from $1.3102

Dollar/yen: DOWN at 111.04 from 111.05

Oil – Brent Crude: UP 29 cents at $74.48 a barrel

Oil – West Texas Intermediate: UP 28 cents at $69.17 a barrel

New York – Dow Jones: DOWN 0.3 percent to 25,451.06 (close)

New York – S&P 500: DOWN 0.7 percent to 2,818.82 (close).

Published in Daily Times, July 31^st 2018.