HONG KONG (AP) – Asian stock markets dithered Tuesday as slumping commodity prices weighed on shares of resource companies.
KEEPING SCORE: Japan’s benchmark Nikkei 225 index recovered from early losses to rise 0.2 percent to 19,924.89.71 after reopening following a public holiday. South Korea’s Kospi climbed 0.6 percent to 2,016.29. Hong Kong’s Hang Seng lost 0.8 percent to 22,486.95 and the Shanghai Composite Index in mainland China fell 0.3 percent to 3,598.34. Australia’s S&P/ASX shed 1 percent to 5,226.40. Benchmarks rose in Taiwan, Singapore, Thailand and Indonesia but fell in India and the Philippines.
COMMODITY CRUNCH: Raw materials such as copper and nickel have slid to multi-year lows on the subdued global economic outlook as well as the dollar’s strength on rising expectations that the Federal Reserve will raise interest rates next month. That’s dragging down commodity producers such as Australian miners BHP Billiton and Rio Tinto. Demand for commodities from international buyers is affected by the strength of the greenback because contracts are priced in dollars.
FED FOCUS: Most investors expect the Federal Reserve to raise interest rates from record-low levels at its mid-December meeting and markets are likely to trade within a narrow range unless signs emerge that the U.S. central bank will change course. That contrasts with monetary policy from other major central banks in Japan and Europe, which are expected to keep the stimulus taps open.
QUOTABLE: “There is no denying we are moving into the eye of the storm, with the market having merged into one giant consensus trade. That trade is of course long US dollar, short commodities and US Treasuries,” said Chris Weston of IG Markets in Sydney. “There simply haven’t been any buyers and commodity futures have been easy to push lower.”