Asian shares fell slightly on Thursday after rallies to multi-month highs, and longer for some Southeast Asian markets, while the U.S. Federal Reserve’s pledge to retain its stimulus policy undermined the dollar.
Sentiment in Asian markets remained underpinned, however, by positive factory output data in Japan, and strong gross domestic product reports from Taiwan and the Philippines.
A weak dollar and signs of stabilization in the euro zone underpinned gold, and expectations that demand will pick up for industrial commodities supported oil and copper prices.
European markets are likely to extend losses, with financial spreadbetters predicting London’s FTSE 100 .FTSE, Paris’s CAC-40 .FCHI and Frankfurt’s DAX .GDAXI would open down as much as 0.3 percent. A 0.1 percent drop in U.S. stock futures suggested a soft open at Wall Street. .L.EU.N
After recent gains that took several markets to multimonth highs, investors appeared to adopt a cautious stance ahead of key data such as China’s official manufacturing PMI and U.S. monthly nonfarm payrolls on Friday.
Data on Wednesday showing the U.S. economy unexpectedly contracted in the fourth quarter also crimped demand, but traders were quick to note that the underlying fundamentals of the U.S. GDP report were not as bad as the headline number.
“After many years of fears that the (U.S.) economy is going to crash, it seemed like the worst is behind us. So better news out of China and expectations for recovery in the United States caused risk money to come back into equities, commodities and energy,” said Tony Nunan, an oil risk manager at Mitsubishi.
Upbeat economic reports from Asia failed to galvanize buying in regional equities, which have sped to multimonth highs, but the data reinforced optimism about the global economic outlook.
Taiwan raised its economic growth forecast for 2013, after the fourth quarter expanded faster than expected and posted its best growth in five quarters on improved demand for the island’s electronics exports and stronger consumption.
The Philippines said on Thursday its economy grew 1.5 percent in the December quarter from the previous three months, better than market forecasts.
The MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.4 percent after rising 1.3 percent over the past two sessions to nearly an 18-month high. The index was set for a monthly gain of about 2.5 percent.
Australian shares .AXJO eased 0.4 percent, pausing after a 10-day winning streak, the longest in more than nine years, which hoisted local shares to 21-month highs.
Southeast Asian stock markets were generally softer but remained near their highs. The Philippines .PSI hit a record high for the third day running on Wednesday and Thailand’s .SETI market surged to a more than 18-year high on Wednesday.