HONG KONG, Nov 29 — Asian traders moved cautiously today, with the recent Trump-fuelled rally subdued by profit-taking, uncertainty over a crucial vote in Italy at the weekend and worries about an Opec plan to cut oil production.
Markets worldwide have soared since Donald Trump was elected US president, on hopes his spending policies will ramp up the world’s top economy.
However, analysts said dealers were taking a breather as other issues come to the fore, with the oil reduction plan in immediate focus.
There are increasing concerns that members of Opec will not be able to agree the details of an agreement in September to reduce output and support prices, with Iran and Iraq saying they should be exempt.
Opec members and non-members including Russia are scurrying to hammer out a deal before the group’s twice-yearly meeting tomorrow.
The uncertainty has fed volatility on oil markets, with both main contracts diving about four per cent Friday but rebounding two per cent yesterday. Prices were down early today.
“Whether Opec manages to make black gold instead of fools gold from its ongoing negotiations, we expect intra-day volatility to ratchet higher again into tomorrow,” Jeffrey Halley, senior market analyst at OANDA, said in a note.
‘Tug of war’
And Son Jae Hyun, a global market analyst at Mirae Asset Daewoo in Seoul, added: “What we are seeing now is a tug of war among Opec members to get their share of the pie. If a deal isn’t made this time, none of them will benefit.”
There is a growing nervousness about a weekend referendum in Italy on constitutional reform. Tensions between Italian Prime Minister Matteo Renzi and the European Union have reached boiling point ahead of the poll and he has suggested he would step down if voters reject the proposal.
There are fears his resignation could spark elections in which populist anti-euro parties could do well, and possibly even lead to the country leaving the EU.
The unease hit European financials, dragging regional markets, while US investors took profits after a string of record closes for the Dow.
Asian markets moved in and out of positive territory through the morning. Tokyo closed down 0.3 per cent, while Hong Kong edged down 0.2 per cent in the afternoon and Shanghai ended up 0.2 per cent.
Sydney slipped 0.1 per cent while Seoul, Singapore and Wellington were all flat.
On currency markets the dollar was subdued, having chalked up multi-month highs against most peers last week on expectations US interest rates will rise in December and again next year.
“The dollar pullback appears to be technical in nature as there was no fundamental trigger for this move,” Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney, told Bloomberg News.
Key figures around 0700 GMT (1500 in Malaysia)
Tokyo - Nikkei 225: DOWN 0.3 per cent at 18,307.04 (close)
Hong Kong - Hang Seng: DOWN 0.2 per cent at 22,784.72
Shanghai - Composite: UP 0.2 per cent at 3,282.92 (close)
Euro/dollar: DOWN at $1.0607 from US$1.0615 yesterday
Dollar/yen: UP at 112.08 yen from 111.94 yen
Pound/dollar: UP at US$1.2417 from US$1.2414
Oil - West Texas Intermediate: DOWN 36 cents at US$46.72 a barrel
Oil - Brent North Sea: DOWN 39 at US$47.85 a barrel
New York - Dow: DOWN 0.3 per cent at 19,097.90 (close)
London - FTSE 100: DOWN 0.6 per cent at 6,799.47 (close) — Bloomberg