* Shares on defensive as Wall St worries on Fed tapering
* Nikkei to draw comfort from lower yen as USD hits 7-mth
* Gold slumps to lowest since late June
* Treasury yields back up after robust retail data
By Wayne Cole
SYDNEY, Dec 13 Asian markets are likely to stay
under pressure on Friday as investors fret over the outlook for
U.S. policy stimulus, though Japanese stocks could draw comfort
from a reversal in the yen against the dollar.
An upbeat reading on U.S. retail sales heightened
speculation the Federal Reserve might start trimming its asset
buying as early as next week, and saw analysts boost forecasts
for economic growth this quarter.
"I suspect strong data will be a minor negative for risk
appetite, as Fed taper concerns prevail over the obvious growth
positives," said Alan Ruskin, global head of FX strategy at
Deutsche Bank in New York.
Which was why Wall Street reacted by shoving the Dow down
0.66 percent and the S&P 500 down 0.38 percent. At
the same time, yields on 10-year Treasury debt
popped back up to 2.88 percent and gave the U.S. dollar a lift.
"From a U.S. dollar perspective this is at best only a mild
positive, best played through yen and the usual emerging market
suspects," added Ruskin. "The muted market reactions suggest
nobody would be terribly surprised with a December taper, even
if the street has yet to reach a consensus on timing."
The Fed meets on Tuesday and Wednesday and, while much of
the market still thinks it will wait until January or March, the
decision on tapering is likely to be a very close call.
The rise in bond yields helped the dollar recoup all the
losses suffered early in the week to touch a seven-month peak at
103.43. Dealers said there were massive stop-loss orders
to buy dollars for yen around 103.50, and a break there could
unleash a sharp move higher.
The euro also gained on the yen to reach a five-year top at
142.25 yen. The single currency took a breather
against the dollar, easing a touch to $1.3751.
Any drop in the yen tends to be viewed as a positive for
Japanese exports and corporate profits, and thus for the stock
market. Nikkei futures bounced to a premium over the
cash market, offering a chance the Nikkei could
stabilise after three straight sessions of losses.
However, other share markets in Asia are likely to take
their lead from Wall Street and remain on the defensive. MSCI's
broadest index of Asia-Pacific shares outside Japan
lost 1.1 percent on Thursday.
Some currencies in the region have also been losing ground
amid concerns an eventual tapering by the Fed will draw capital
away from their markets.
Indonesia's rupiah hit a near five-year low of 12,040 per
dollar, while the Malaysian ringgit and the
Indian rupee also lost ground.
Another casualty was the Australian dollar, which sank a
U.S. cent to $0.8930 after the head of the country's
central bank reiterated his desire for a lower currency.
Reserve Bank of Australia (RBA) Governor Glenn Stevens
confirmed that he would rather see any further easing in
domestic financial conditions come through a drop in the Aussie,
rather than a cut in interest rates.
The central bank has for months been running a verbal
campaign to get the currency down to support trade-exposed
sectors of the economy.
In commodity markets, the higher U.S. dollar weighed on
gold. It skidded to $1,202.10 an ounce, away from the
week's top at $1,267.26 and the lowest since the end of June.
Brent oil futures fell below $109 a barrel on the possible
reopening of major Libyan ports this weekend and expectations
that the Fed may soon start unwinding its stimulus.
Brent crude oil fell $1.11 to $108.59 a barrel. In
contrast, U.S. crude futures for January delivery were up
6 cents at $97.50 a barrel.