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GLOBAL MARKETS-Asian shares struggle to rise, dollar slips


Reuters

* European share markets seen opening lower
    * Passage of US healthcare bill seen doubtful
    * Fading expectations of US rate hike by year-end hit dollar

    By Lisa TwaroniteTOKYO, July 18 (Reuters) - Asian shares stepped back from
more than two-year highs on Tuesday while the dollar extended
losses as passage of a U.S. healthcare bill grew doubtful, and
as investors bet the Federal Reserve will be more cautious about
raising interest rates.
    MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> fluttered between positive and negative
territory and last was slightly higher. But it remained well shy
of its loftiest levels since April 2015, scaled in the previous
session.
    Republican Senators Jerry Moran and Mike Lee announced their
opposition on Monday to U.S. legislation to dismantle and
replace the Affordable Care Act, commonly known as Obamacare,
leaving it without enough votes to pass. [nL1N1K9021]
    U.S. S&P stock futures <.SPc1> edged down slightly after the
news, and were last off 0.1 percent.
    In Europe, futures for the Eurostoxx 50 <STXEc1> and the DAX
<FDXc1> were both down 0.4 percent, while the FTSE <FFIc1> was
0.3 percent lower.
    Wall Street ended little changed on Monday in low-volume
trading, as investors braced for a flood of second-quarter
earnings reports later this week. [.N]
    Overall Asian sentiment remained underpinned by solid China
data on Monday, which showed its economy expanded at a
faster-than-expected 6.9 percent clip in the second quarter,
setting the country on course to comfortably meet its 2017
growth target. [nL3N1K81AY]
    Chinese shares on Tuesday faced profit-taking as well a
sell-off in small-caps. Both both the blue chip CSI300 index
<.CSI300> and the Shanghai Composite Index <.SSEC> were down in
the morning, then turned marginally up.
    "At the end of this month, corporate China has to pay their
tax bill, so you have people taking money off the table and
liquidating," said Gavin Parry, managing director at Parry
International Trading Limited in Hong Kong.
    The dollar, already down in early trade, extended losses. It
slipped 0.5 percent on the day to 112.14 yen <JPY=>, well below
its nearly four-month high of 114.495 touched last week.
    The euro jumped 0.4 percent to $1.1522 <EUR=>, after earlier
pushing to its highest since May 2016.
    The Australian dollar surged 1.5 percent to two-year highs
after minutes of the last meeting of the country's central bank
showed policymakers turned more upbeat on the economic outlook.
[nL3N1K91G4]
    The dollar index, which tracks the greenback against a
basket of six major rivals, wallowed at 94.791 <.DXY>, down 0.2
percent after plumbing its lowest levels since September 2016.
    "It's hard to be bullish on the dollar, both from the
monetary side and from the U.S. politics side," said Masafumi
Yamamoto, chief currency strategist at Mizuho Securities.
    Fading support for U.S. President Donald Trump was weighing
on the dollar, he said, as the U.S. administration struggled to
gather enough backers in the Senate to pass the healthcare
reform bill, raising doubts about how the rest of its ambitious
agenda would fare.
    "Trump's falling popularity, although it was not spectacular
from the beginning, is another hurdle for pushing for the
changes, and that will be negative for the U.S. economy and the
dollar," said Yamamoto.
    Japan's Nikkei stock index <.N225> dropped 0.6 percent to
end the day a hair below the key 20,000 level, as markets
resumed trading after a public holiday on Monday and caught up
to the resurgent yen.
    Fading U.S. rate hike bets also weighed on the dollar. Fed
funds futures <FFZ7> <FFF8> continue to show less than a 50
percent chance of a rate hike in December after Fed Chair Janet
Yellen sounded a cautious tone last week in congressional
testimony, and following downbeat U.S. inflation and retail
sales data on Friday. [nL1N1K30F8] [nL1N1K50H3]
    "U.S. data is still not strong," said Harumi Taguchi,
principal economist at IHS Markit in Tokyo. The combination of
that data and the political situation has pressured U.S.
Treasury yields, which undermines the dollar, she said.
    The U.S. 10-year yield <US10YT=RR> stood at 2.303 percent in
Asian trading, down from its U.S. close on Monday of 2.309
percent.
    "We still expect the Fed to hike in December, but unless the
market expects the same, I don't think interest rate
differentials are going to widen," Taguchi said.
    Crude oil futures edged higher, benefiting from the weaker
dollar, with U.S. crude <CLc1> was slightly higher at $46.03 per
barrel and Brent crude <LCOc1> adding 0.1 percent to $48.46.
    On Monday, crude prices had skidded about 1 percent as
investors held out for strong indications that an OPEC-led
effort to drain a glut was proving effective. [O/R]
    The weaker dollar lifted spot gold <XAU=> which rose 0.3
percent to $1,237.50 per ounce. [GOL/]

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
MSCI, Nikkei datastream chart    http://reut.rs/2sSBRiD
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Lisa Twaronite; Editing by Shri Navaratnam and
Richard Borsuk)
 ((lisa.twaronite@thomsonreuters.com;)(+81 3 6441 1870; Reuters
Messaging: lisa.twaronite.thomsonreuters.com@reuters.net))

((To read Reuters Global Investing Blog click on
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((For the state of play of Asian stock markets please click on: <0#.INDEXA>))

Keywords: GLOBAL MARKETS/ (WRAPUP 3)



This article appears in: Politics , World Markets , US Markets , Stocks


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