Asian Market Update – Friday: Asian stocks mixed as the dollar fall continues.

dollar crisis

The Big Question: With the dollar at its lowest level since the end of 2014, investors are wondering where it will end.

Stock markets across Asia Pacific are mixed on the last trading day of the week, as the US dollar extends losses, dropping another 0.4% against the euro in the early hours of the Asian trading session.

This most recent drop in the dollar came after European Central Bank President Mario Draghi expressed that tapering of monetary stimulus in the Eurozone might begin this fall.

Investors are now beginning to wonder what can stop the falling dollar, as some are seeking to protect themselves against it by buying gold.

In Japan, the Nikkei 225 lost 0.49 percent, trading around the 19,300 level. The index is now near levels where it has found support in the past couple of weeks.

In South Korea, the KOSPI index is down 0.14 percent to 2,343 at midday.

In Australia, the benchmark ASX 200 lost 0.37 percent, trading at 5,668.

In Greater China, the Hang Seng Index in Hong Kong gained a good 0.60 percent in the first half of the trading day, trading at 27,689. The Shanghai Composite was also up by 0.24 percent to 3,373, extending an uptrend that has lasted for months.

This weekend, all eyes are again on North Korea, as the regime is reportedly making preparations for yet another test launch of what is possibly an intercontinental ballistic missile (ICBM), which could happen as early as Saturday.

Should the rogue regime in Pyongyang choose to do this, even more pressure will be added on President Donald Trump to put an end to the provocations. Trump has previously warned about “fire and fury”, and the question is if he is ready to back up those words by actions.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,300 -0.49%
China-Shanghai Composite Index 3,373 0.24%
Australia-ASX 200 5,668 -0.37%
Hong Kong-Hang Seng 27,689 0.60%
South Korea- KOSPI 2,343 -0.14%

Cryptocurrencies

Digital currencies are still struggling to make gains, but seem to have stabilized somewhat following the Chinese ICO ban.

While bitcoin is nearly unchanged during the Asian trading session, Etherum is down by 1.15 percent, trading at $331. Bitcoin is currently trading at $4,613, despite rumors that the recent tightening in regulations in China is just the beginning.

Currencies

The Japanese yen gained 0.15 percent against the US dollar during the Asian trading session to 108.19 per dollar.

The Chinese yuan is continuing to surge against the US dollar, adding 0.52 percent in the first half of the Asian trading session Friday. The upward trend for the yuan is gaining momentum and now appears very strong, as the CNY/USD is breaking through major resistance levels in the chart.

Chinese yuan breakthroughThe Australian dollar is also surging against the dollar, adding 0.7 percent Friday. The AUS/USD is now trading at 0.81.

Commodities

WTI Oil gained 0.22 percent to $49.21 per barrel.

Brent Crude was up 0.46 percent to $54.74 per barrel.

Gold gained 0.30 percent to $1,353 an ounce.

Business News across Asia

In North Korea, the rogue regime is widely expected to perform yet another intercontinental ballistic missile launch on Saturday. The question now is whether the trajectory will be over Japanese territory again. Simple geography dictates that Japan is the most likely direction for a missile launch, because firing towards China would be extremely foolish, and a more southern trajectory could be perceived as heading towards the US mainland. Another cause of concern is whether the missile will carry a nuclear payload to demonstrate the North’s ability to arm their missiles.

Take away: A missile headed towards the US mainland will likely be perceived as a threat by the US military and could trigger an immediate retaliation. Also, even an unarmed missile heading in any direction will pose a huge threat to civilian aviation and maritime traffic. Expect further losses in the US dollar and global equity markets should this happen.

In Malaysia, criticism is growing against the government after it signed a deal allowing a Chinese company to construct a new railway project called the East Coast Rail Link. Local companies are unhappy about government funds being funneled to China instead of being spent on Malaysian contractors.

Take Away: This is part of a growing trend among South-East Asian countries feeling the pressure from China’s growing influence. On one side, Chinese investments are propping up the economies in many of these countries, but it is often at the expense of local businesses that cannot remain competitive in the face of cheap and fast-working Chinese companies.

Author:
Fredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.