Asian shares stabilize, focus turns to China reform plan

TOKYO Mon Nov 11, 2013 6:25pm EST

1 of 7. A traffic controller at a constructing site is reflected on a stock quotation board at a brokerage in Tokyo October 1, 2013.

Credit: Reuters/Issei Kato

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TOKYO (Reuters) - Asian shares held steady on Tuesday, with investors turning their attention to the Chinese Communist Party policy-meeting for clues to China's economic agenda for the next decade, while the dollar's two-day rally against the euro came to a halt.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.1 percent after a three-day run of losses, while Australian shares .AXJO gained 0.3 percent.

Overnight, U.S. stocks edged up, lifting the Dow Jones industrial average .DJI to another record closing high in light volume on Veterans Day. .N U.S. S&P 500 E-mini futures were flat in early Asian trade.

All eyes will be on the unveiling of China's economic blueprint for the next decade later on Tuesday as Beijing seeks to balance the need to overhaul the world's second-largest economy while it tries to preserve stability and to reinforce the Communist Party's power.

"In terms of the effect on the market, some people actually believe it might be slightly negative and the reason for that is that ... you have a situation where the current investment in Chinese infrastructure slows down as these laws are changed," said Evan Lucas, market strategist at IG in Melbourne.

But on a medium-term view, changes to the Chinese economy would boost growth in the region, he said.

The dollar was steady at 99.18 yen, while the euro was little changed at $1.34045 after bouncing 0.3 percent on Monday, ending a two-day streak of losses that saw the single currency briefly touch an eight-week low last Thursday on the back of a surprise rate cut by the European Central Bank.

The outlook for the dollar remained upbeat with expectations that the U.S. Federal Reserve might reduce its massive stimulus sooner than thought after a strong October jobs print.

Emerging currencies look set to remain on the defensive, however, on concerns about capital outflow, if the Fed removes its cheap money policy.

Indonesia's central bank is likely on Tuesday to keep its benchmark reference rate on hold at its monthly meeting, as inflation has stabilized and the current-account deficit is expected to narrow, relieving pressure on the ailing rupiah, which lost 1.3 percent to a one-month low of 11,555 per dollar on Monday.

Tokyo's Nikkei futures rose 0.3 percent, signaling a firmer open for the Nikkei share average .N225 after the benchmark rallied 1.3 percent from a three-week low on Monday.

U.S. crude prices slipped 0.2 percent to just below $94.7 a barrel, giving up some of the 0.4 percent rise on Monday after Iran and six world powers failed to reach a deal on Tehran's nuclear program and after Chinese data pointed to a rise in fuel demand. <O/R>

Gold dipped 0.1 percent to below $1,282 an ounce, hovering near a three-week low touched overnight. <GOL/>

(Editing by Shri Navaratnam)

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Comments (6)
Whittier5 wrote:
Taper will not begin anytime soon. The tea potty Shutdown assured that,,,, which begs the question, “Who are the tea potties working for?”

While the Fed has adopted a wrong-headed policy of supporting the Big Banks & Brokerages instead of the Economy and Jobs, the Economy is far too fragile for them to begin ‘Taper’.

Nov 11, 2013 7:45am EST  --  Report as abuse
Rhino1 wrote:
This article is a perfect example for what the press/media is all about. They write two pages about what is responsible TODAY for rising stock prices, when the explanation is so simple: All the money Mr. Bernanke pumps into the banks is going straight to the stock market. None of it reaches the real economy in form of loans.

There you go. 5 lines and it’s all said.

Nov 11, 2013 8:17am EST  --  Report as abuse
DinkSinger wrote:
Even more important than last week’s employment numbers was the inflation number contained in the preliminary 3rd quarter GDP numbers released by the Bureau of Economic Analysis. The Fed dual mandate calls for it to seek both maximum employment and price stability. It has defined price stability as a long-term annual inflation rate of 2.0%, as measured by the Personal Consumption Expenditure price index. In recent quarters that index had been moving away from the goal and in the 2nd quarter it dropped to -0.1%,a deflationary number since the 1st quarter in 2009. The preliminary 3rd quarter number was 1.9%.

While Janet Yellen won’t tell the senate committee “I’m not telling you” about the taper, she is going to tell them exactly what Bernanke has been telling each house in his semi-annual testimony and what the Federal Open Market Committee has been telling the public. This is the way the FOMC put it in their October 30 statement:
“The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. Asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s economic outlook as well as its assessment of the likely efficacy and costs of such purchases.”

Nov 11, 2013 9:32am EST  --  Report as abuse
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