Weak Asia after the clashes in Ukraine
Geopolitics dominates Asian markets this week. The intensification of fighting in eastern Ukraine worries the markets, who fear a Russian intervention. In Tokyo and in Seoul the market is closed for holidays but in Shanghai and Hong Kong the stock exchanges show a drop of about 1%. The MSCI Asia Pacific ex-Japan index lost 0,3% in the early afternoon in the Far East. A lower-than-expected figure also added to the bad mood: the second reading of the PMI index for China from HSBC-Markit came in at 48,1 against an expected 48,4, in any case below that threshold of 50 which is the watershed between the decrease and the increase in production in the manufacturing sector. Two clarifications must be made, however: the watershed is not absolute but relative, that is to say between 'things are going better' or 'worse' than before. So a reading below 50 indicates more of a slowdown than a fall; and in any case a slowdown of the Chinese economy is desirable, for many reasons. But the markets always fear that the slowdown is a prelude to disastrous falls…
The dollar weakened both against the euro (1,378) and against the yen (101,9), while geopolitical tremors support gold, which returns to 1300 (1306 $/ounce). Oil is still weak, below 100 (99,8 WTI - 108,4 Brent).
http://www.bloomberg.com/news/2014-05-05/asia-stocks-rise-for-second-day-after-u-s-payrolls-surge.html
