(Corrects milestone on yen to more than 5-year low in eighth
By Dominic Lau
TOKYO Dec 20 Asian shares got off to a cautious
start on Friday tracking a more circumspect session on Wall
Street overnight, as investors reassessed the Federal Reserve's
policy outlook following its decision this week to start
tapering its massive stimulus.
U.S. government bond prices fell on emerging doubts about
the Fed's commitment to rock-bottom interest rates.
Gold tumbled to a near six-month low, extending months of
weakness after the U.S. central bank finally scaled back its
stimulus that has pushed the precious metal to record territory
in recent years. Gold is on track for its worst yearly decline
MSCI's broadest index of Asia-Pacific shares outside Japan
added 0.1 percent after ending a touch softer in
the previous session.
In Tokyo, Nikkei futures were up slightly, indicating a
modest gain for the benchmark Nikkei ahead of the
outcome of a two-day Bank of Japan policy meeting.
The Nikkei rallied 1.7 percent to its highest closing level
in six years on Thursday as the yen slid after the Fed's taper
Analysts said the Fed's smooth start in trimming its
stimulus by $10 billion to $75 billion a month without
disrupting markets removed one uncertainty for the BOJ, giving
it more time to decide whether further monetary expansion will
be needed next year.
The yen was steady at 104.24 yen to the dollar in
early Asian trade, hovering near a more than five-year trough
for a second day after having fallen 1.6 percent on Wednesday
following the Fed announcement.
The euro languished near a two-week low at $1.3657.
"With the Fed now having begun the tapering process, the
burden of proof now seems to be on the side of the data to
weaken sufficiently to force a halt," analysts at BNP Paribas
wrote in a note.
Thursday's data showed U.S. home resales hit a near one-year
low in November and new filings for unemployment benefits
unexpectedly rose last week, dulling an otherwise brightening
Overnight, U.S. stocks finished mostly flat as investors
paused after a rally in the previous session, though the Dow
Jones industrial average closed at its second record high
in a row. U.S. S&P 500 E-mini futures inched up 0.1
percent in early Asian trade on Friday.
The 10-year U.S. Treasury yield jumped as high
as 2.9512 percent on Thursday, hitting a three-month peak.
Deutsche Bank analysts said they expected the U.S.
unemployment rate to fall faster then the Fed projections and
the risk was that inflation pressures would start to mount
earlier than the U.S. central bank anticipated.
"They will not be able to follow the very gradual path of
rate hikes the market expects," they said in a report.
In a move likely meant to pre-empt any sharp market reaction
that could undercut the recovery, the Fed also said in its
tapering announcement that it "likely will be appropriate" to
keep overnight rates near zero "well past the time" that the
U.S. jobless rate falls below 6.5 percent.
Among commodities, U.S. crude prices edged down 0.1
percent to $98.68 a barrel, pausing after Thursday's 1 percent
rise on the back of U.S. refinery oil demand to meet robust
Gold hit a near six-month low of $1,185.30 an ounce
on Friday, extending a 2.3 percent slide overnight. The yellow
metal is down 29 percent, heading for its worst annual decline
(Editing by Shri Navaratnam)