British Turmoil Continues to Drain Risk From Asian Markets
June 27 2016 - 11:50PM
Dow Jones News
Shares in Asia were choppy Tuesday as uncertainty after the
U.K.'s decision to leave the European Union continued to unnerve
investors.
Stock markets across the region opened down, as a broad selloff
in U.S. and eurozone stocks overnight hit sentiment in early Asian
trade. But signs emerged that markets were stabilizing, which
reduced some losses.
Japan's Nikkei Stock Average fell as much as 1.9% in the
morning, but the benchmark then reversed losses to be about
flat.
Elsewhere in the region, Hong Kong's Hang Seng Index fell 0.9%,
Australia's S&P/ASX 200 was down 1.8%, and Korea's Kospi turned
up 0.2%. China's Shanghai Composite Index slid 0.1%.
The Australian shares of recently listed U.K. bank CYBG PLC have
fallen by more than a third since Friday, when it was clear that
Britain had chosen to leave the European Union. The firm is the
holding company for the British institutions Clydesdale Bank PLC
and Yorkshire Bank, which National Australia Bank Ltd. spun off in
an Australian listing in early February.
"It's general risk-off sentiment until there's going to be more
clarity surrounding Europe," said Alex Furber, senior client
services executive at CMC Markets in Singapore. "We just need to
see how it pans out. The selloff seems to be indiscriminate."
Traders and investors were focusing on whether the Bank of Japan
would intervene to counteract the yen's strength against the U.S.
dollar. The yen, like gold, is a traditional safe-haven asset amid
times of market turmoil, but its strength hurts the competitiveness
of Japanese exporters. The currency was recently stable at 101.79
to one U.S. dollar.
"It might dominate the behavior of the Bank of Japan, which
obviously is going to have a fairly significant effect on what we
see in Asia," Mr. Furber said.
Other havens drew investors Tuesday. In Hong Kong, the only
positive sector so far this week is a Hang Seng subindex comprised
of telecom stocks. It's up 1% this week.
Meanwhile, the price of gold was last trading at $1,324 per troy
ounce. And the yield on the newest 20-year Japanese government bond
fell to a fresh record low of 0.04%.
A small recovery could emerge this week as investors
bargain-hunt for oversold stocks, says Jacob Rappaport, managing
director and head of equity capital markets at INTL FCStone
Financial Inc.
Brent crude oil was recently trading up 0.9% at $47.59 per
barrel.
Robb Stewart contributed to this article.
Write to Dominique Fong at Dominique.Fong@wsj.com
(END) Dow Jones Newswires
June 27, 2016 23:35 ET (03:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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