Trade tensions torpedo oil, US sanctions hammer Russian rouble

SYDNEY — Asian shares were subdued on Thursday after a new round of tit-for-tat tariffs in the US-Sino trade conflict torpedoed oil prices, while the Russian rouble tumbled as the US slapped fresh sanctions on the country.

MSCI's broadest index of Asia-Pacific shares outside Japan barely budged as caution dominated. Japan's Nikkei slipped 0.5 percent, not helped by a shock slump in core machinery orders.

Early Thursday, China's state broadcaster said China must counteract US tariffs and Beijing had the confidence to protect its own interests as well as the means to do so.

China had already announced additional tariffs of 25 percent on $16 billion worth of US imports from fuel to autos. The tariffs will apply to billions of dollars in U.S. gasoline, diesel and other oil products, though not crude.

Analysts at ANZ noted there were also reports President Xi Jinping had asked China's major oil companies to increase domestic output to safeguard the country's energy security.

The oil market took the news hard with selling escalating as major technical levels broke.

US crude was last down 12 cents at $66.82 per barrel, having shed 3.2 percent on Wednesday, while Brent was off 2 cents at $72.26.

On Wall Street, trade-sensitive industrial companies were the biggest drag on the Dow, with declines led by Boeing and Caterpillar Inc.

The Dow fell 0.18 percent, while the S&P 500 lost 0.03 percent and the Nasdaq added 0.06 percent.

More sanctions

In currency markets, the Russian rouble sank after Washington said it would impose fresh sanctions because it had determined that Moscow had used a nerve agent against a former Russian agent and his daughter in Britain.

There were also reports of a new US Senate bill that would impose widespread sanctions on Russia for election meddling.

The rouble duly slid to its lowest since late 2016, with the dollar buying 65.50 roubles having jumped 3.4 percent overnight.

The pound skidded to its lowest against the dollar and euro in almost a year as fears grew Britain might leave the EU without a deal on trade with Brussels.

Traders reported a significant increase in investors hedging against a 'no-deal' Brexit, an event which could send sterling into free fall and hurt the economy by raising trade barriers with the UK's biggest export market.

Sterling was last trading at $1.2877, having dropped 0.4 percent overnight.

The Japanese yen seemed to be catching a bid as a traditional safe haven, with the dollar easing to 110.81 yen after stretching as high as 111.44 on Wednesday.

The euro was relatively steady at $1.1611, while the dollar index was a shade firmer at 95.098.

The New Zealand dollar shed 0.9 percent to a two-year trough at $0.6682 after the country's central bank took a dovish turn, pledging to keep rates at record lows well into 2020.

The Reserve Bank of New Zealand (RBNZ) said rates were likely to be on hold for longer and cut its forecasts for economic growth this year and next. —Reuters

Fears over bitcoin use in terror financing

The global bitcoin craze has attracted almost everyone, from mom-and-pop traders to giant investment banks.


Promoters of bitcoin and other cryptocurrencies tout them as being safe and secure, and without oversight from financial regulators.

But there is some concern that these very advantages could be exploited by terrorists to transfer funds from one place to another.

Financial intelligence experts from the region say this is already happening, with several suspicious financial transactions detected recently.

Some of these experts gathered in Malaysia last month for the Third Counter-Terrorism Financing Summit. The security experts from 35 countries unanimously agreed that the first step to disrupting militant operations is by cutting off their funds.

A new alliance between Australia and South-east Asia has also been formed to directly target and disrupt the funding lifeline of terrorist groups by denying them access to the international financial system and other sources of funds.Sources told The Straits Times that the high degree of anonymity offered by digital currencies makes them a possible preferred avenue for militants in South-east Asia.

“The number might not be big but we know it’s picking up. Their ultimate goal is to make sure that these funds get where they’re supposed to be,” said one source.

“Small or big, it can help move any terrorism planning to the next level – launching attacks.”

While the surge in the value of bitcoins and similar cryptocurrencies has garnered widespread media attention, security experts say the terrorists use digital currency not to make money, but for ease of moving funds between borders without the regular banking scrutiny.

For operational reasons, officials declined to reveal the locations and frequency of such transactions. But the identity of some of these financial movements on the Web has been determined, said a second source.

“Special equipment and database are already in place to help analyse these patterns. Identity is key to uncovering terrorism activities. We can monitor and trace the origin of the fund but to know who’s behind it is very tricky,” he said.

“We have all these equipment in place, but it’s still very hard to ‘crawl’ in the dark Web market,” the source added.

Malaysian criminologist P. Sundramoorthy said the consequences of militants or sympathisers switching to the use of cryptocurrency would be devastating as terror groups could be expected to execute attacks after receiving the funds.

“Given that cryptocurrency offers a high degree of anonymity and is popular and user-friendly, measures to control it must be put in place as soon as possible. They will always find a way to exploit such channels. We can’t eliminate the use but we need to limit it.”

Still, some experts say the issue might have been played up.

In a recent study by the Royal United Services Institute (Rusi), the British intelligence think-tank suggested that there is little link between cryptocurrency and terrorism. It said the claims that bitcoin is funding terrorism are greatly exaggerated.

Mr David Carlisle, an independent consultant with Rusi, said in a March 2 commentary: “Treating cryptocurrencies as an exceptional threat creates the misleading impression that more conventional financial products are not already equally, or more, vulnerable to terrorist exploitation.”

A regional security source acknowledged that most militants are indeed still channelling funds via conventional banking and money remittance services.

Still, it has been noticed that digitial currency has also been used as a means of transfer.

“We still see most of them funding their operations by taking personal loans, selling their belongings and so on. But to say the possibility of these militants turning to the dark Web is little or unlikely, that’s dangerous as we’re already seeing suspicious movements which we believe are terrorism fundings,” he said. “They will always try to find new ways to exploit technology to materialise their sick agenda.”

The danger of terrorist financing can be gleaned by the capture of Marawi in the southern Philippines by militants that ended in October after a five-month siege.

The Associated Press reported last month that Philippine military chief Eduardo Ano said at least US$1.5 million (S$2 million) was sent by terrorist group Islamic State in Iraq and Syria to finance militants planning the Marawi attack.

As Malaysia begins to impose controls over the growing use of digital currencies, Bank Negara Malaysia (BNM), its central bank, has required that conversions of cryptocurrencies into cash must be reported under the strict transactions under anti-money laundering laws.

Deputy Home Minister Nur Jazlan Mohamed said: “BNM has announced measures that would regulate the use of cryptocurrencies in Malaysia, especially the conversion of cryptocurrencies into cash and other equivalents. This measure will help the police and other enforcement agencies to manage terrorism financing.”

source: business.inquirer.net

Dollar clings to most of its gains as risk sentiment improves

TOKYO — The dollar held on to most of its gains on Tuesday, following a sharp rebound on improving investor risk sentiment as worries over North Korea and Hurricane Irma receded.

The dollar index, which tracks the greenback against a basket of six major rivals, was steady at 91.874, after it skidded to a 2-1/2-year low of 91.011 on Friday.

The euro was little changed at $1.1955 after shedding 0.7 percent overnight. The common currency reached $1.2092 on Friday, its highest since January 2015, as the dollar suffered a broad retreat.

Higher US Treasury yields also bolstered the dollar, as the benchmark US 10-year note yield rose to 2.135 percent from its close of 2.125 percent on Monday, and 2.061 percent on Friday.

"Some people said the dollar's fall and recovery was not strange, since US yields got so low," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

"But the market is still sensitive to risk-off news, maybe from North Korea, or from disappointing US economic data," he said. "So that's why the dollar is still struggling to find its way."

The dollar was steady at ¥109.39 after rallying 1.4 percent on Monday, its biggest one-day surge since mid-January.

It had slumped to a 10-month low of ¥107.320 on Friday, when Hurricane Irma threatened Florida and as financial markets braced for the possibility of another missile or nuclear test to mark North Korea's founding day on Sept. 9. The yen tends to benefit during times of economic and political uncertainty due to Japan's net creditor nation status.

But Pyongyang's anniversary passed without further tests, and Irma lost strength and was downgraded to a tropical storm after battering Florida over the weekend.

"Receding fear over Hurricane Irma and North Korea was a key factor behind the dollar's bounce. Market focus is likely to return to fundamentals, although there aren't many major events scheduled this week that could decide the direction for currencies," said Shin Kadota, senior strategist at Barclays in Tokyo.

Major US allies in Asia welcomed on Tuesday the UN Security Council's unanimous vote to step up sanctions on North Korea, with its profitable textile exports now banned and fuel supplies to the reclusive North capped after its sixth nuclear test.

The Swiss franc, often sought in times of global risk aversion along with the yen, was flat at 0.9560 per dollar. The franc had rallied to a two-year high of 0.9421 on Friday.

The pound edged up 0.1 percent to $1.3175 after losing 0.25 percent on Monday.

Sterling fared better against the euro, brushing a fresh one-month high of 90.83 pence, aided by speculation that the Bank of England may sound more hawkish on interest rates in defense of the currency at its policy meeting on Thursday.

The Australian dollar was 0.2 percent lower at $0.8015, extending its retreat from a two-year peak of $0.8125 scaled on Friday.

The Chinese yuan pulled further away from Friday's 21-month high against the dollar of 6.5432, after China's central bank on Monday lifted measures put in place to support the yuan when it came under selling pressure. — Reuters

British vote on leaving the EU rocks world financial markets

SEOUL, South Korea — World financial markets were rocked Friday by Britain’s unprecedented vote to leave the European Union, with stock markets and oil prices crashing and the pound hitting its lowest level in three decades.

The uncharted, unexpected path of a European Union without Britain sparked the sell-offs, with more jitters expected as global markets try to digest the shock result.

Tokyo stocks plummeted about 8 percent, their biggest fall since 2008, while South Korea’s Kospi tumbled about 3 percent. Britain’s FTSE 100 futures tanked 8.3 percent.

Crude oil prices and US futures also took a big hit. The British pound plummeted more than 10 percent in six hours while the yen surged about 3 percent to the US dollar as investors seeking safety snapped up the Japanese currency.

By early afternoon in Asia, a tally by the BBC showed Britain had voted to leave the 28-nation European Union by about a 52 percent to 48 percent margin.

Japan’s Nikkei 225 plunged 8.3 percent to 14,897.32 while South Korea’s Kospi sank 3.4 percent to 1,918.70. Hong Kong’s Hang Seng index tumbled 4.8 percent to 19,866.20 and Australia’s S&P/ASX 200 fell 3.4 percent to 5,012.20. Stocks in Shanghai, Taiwan, Sydney and Southeast Asian countries were sharply lower.

US futures took a dive. Dow futures fell 3.4 percent and S&P futures nosedived 5 percent.

“Financial markets throughout the night have been chaotic to say the least and this may continue as the day progresses,” said Craig Erlam, senior market analyst at Oanda in London. “All eyes will now be on central banks around the world to see how they respond to these market developments, particularly the Bank of England and the Bank of Japan.”

On Thursday, Wall Street finished with rallies as pre-poll forecasts showed that Britain would keep the EU membership. Asian stock markets opened the day higher but the mood turned sour as results started to show that the “leave” vote would win. As the results increasingly pointed to the EU exit, investors dumped stocks and other risky assets.

The results sent the pound on a wild ride. It rose to its highest point for the year of $1.50 before tumbling more than 10 percent to a low of $1.3303, its lowest level since 1985.

In other currencies, the dollar fell to 101.51 yen from 104.80 yen while the euro weakened to $1.097 from $1.132.

Benchmark US crude plummeted 6.4 percent, or $3.17, to $46.94 per barrel in New York. Brent Crude, the benchmark for international oil price, fell 6.1 percent, or $3.11, to $47.80 per barrel in London.

source: newsinfo.inquirer.net

Pound, Asia markets collapse as Britain quits EU

HONG KONG—The pound collapsed to a 31-year low and currency, equity and oil markets went into freefall Friday as projections showed Britain has voted to leave the European Union.

Sterling crashed more than nine percent to $1.3305, its weakest level since 1985, while the greenback itself slumped below 100 yen for the first time in two-and-a-half years as traders fled to safety.

In the weeks leading up to Thursday’s historic vote, there had been widespread warnings that a vote to leave would cause another rout across global markets that would wipe trillions off valuations, just months after a painful China-fuelled sell-off.

And as results came in, the doomsday scenario began to unfold as the BBC and other broadcasters called a win for “leave”.

The pound had earlier topped $1.50 following predictions the “remain” group would win but as the Brexit camp posted victories around the country, traders stampeded to put in sell orders.

The dollar slumped briefly to 99.02 yen, the first time it has gone below 100 yen since November 2013, before edging back up slightly. The Japanese unit is considered a safe bet in times of uncertainty and turmoil.

Japan’s Finance Minister Taro Aso will hold an emergency news briefing Friday. He has previously said Japan would closely watch the dollar-yen rate and act accordingly if the yen became too strong, indicating the government could intervene in currency markets.

A flight to safety also saw higher-yielding and emerging market currencies slump, with the Australian dollar down 3.2 percent, South Korea’s won diving 2.4 percent, Malaysia’s ringgit down 2.3 percent and the Indonesian rupiah shedding 1.7 percent.

There were also heavy losses for India’s rupee, the Canadian dollar and the Singapore dollar.

‘Independence day’

The outcome has upturned expectations, which had been for a tight race narrowly won by the “remain”, while bookmakers had said there was a 90 percent chance of staying in.

But as the shock results rolled in, equity markets went into meltdown.

Tokyo plunged more than eight percent in the afternoon, Sydney shed 3.7 percent and Seoul was 3.5 percent off. Mumbai lost three percent and Shanghai sank 1.4 percent by lunch, while Taipei, Wellington, Manila and Jakarta all saw sharp losses.

Hong Kong tumbled 4.7 percent by the break with British banking giants HSBC and Standard Chartered both plunging more than 10 percent.

In the early hours in Britain, Nigel Farage, leader of the anti-Europe UK Independence Party, declared victory, saying it was the country’s “independence day”.

The prospect of a severe hit to the global economy also hammered oil prices, with both main contracts slumping more than six percent.

“We are seeing oil swept up in the general market nervousness to the vote,” Ric Spooner, a chief analyst at CMC Markets in Sydney, told Bloomberg News.

“Corrections are likely to be fairly shallow in oil because prices will be supported by the fact a balanced market is firmly on the horizon.”

source: business.inquirer.net

Asian indexes little changed as Belgian attacks worries ease

TOKYO — Asian stock indexes fell Wednesday in cautious trading, following the deadly bombings in Belgium.

KEEPING SCORE: Japan’s benchmark Nikkei 225 fell 0.3 percent to 17,000.98. South Korea’s Kospi edged 0.1 percent lower to 1,995.12. Hong Kong’s Hang Seng fell 0.7 percent to 20,524.41, while the Shanghai Composite dropped 0.5 percent to 2,983.86. Australia’s S&P/ASX 200 lost 0.5 percent at 5,204.30. Southeast Asian markets were mostly lower.

ATTACK WOES: News of the attacks in Belgium, which killed at least 34 people, had pulled global markets lower, and airlines and travel companies continued to slip in Asia. Major Japanese carrier ANA fell 0.6 percent, while Australia’s flagship carrier Qantas Airways was down nearly 0.3 percent. HIS Co., a major Japanese travel company, slipped 2.3 percent.

WALL STREET: The Dow Jones industrial average lost 41.30 points, or 0.2 percent, to 17,582.57. The Standard & Poor’s 500 index dipped 1.80 points, or 0.1 percent, to 2,049.80. The Nasdaq composite added 12.79 points, or 0.3 percent, to 4,821.66.

THE QUOTE: “The Brussels explosions gave the market a shock yesterday,” said Margaret Yang Yan, market analyst at CMC Markets Singapore. “This attack, together with a series of terrorist attacks believed to have been perpetrated by ISIS since last year, will have an impact on investors’ confidence.”

ENERGY: U.S. crude slipped 52 cents to $40.93 a barrel in electronic trading on the New York Mercantile Exchange. It fell 7 cents to $41.45 a barrel on Tuesday. Brent crude, the benchmark for international oils, fell 38 cents to $41.41 a barrel in London.

CURRENCIES: The euro rose slightly to $1.1206 from $ $1.1200, while the dollar rose to 112.34 yen from 111.65 yen. TVJ

source: business.inquirer.net

Global winds chill business optimism in Europe

FRANKFURT, Germany — Business confidence fell in Germany and France this month, increasing concern that the global market turmoil may be weighing on the economy of the 19-member euro currency union.

Germany’s closely watched Ifo confidence index fell to 105.7 points in February from 107.3 last month, the third decline in a row. France’s INSEE index dropped to 100 points in February from 102 in January.

The data released Tuesday bolsters the argument for the European Central Bank to expand its monetary stimulus efforts at its next meeting March 10.

The central bank is currently pumping 60 billion euros ($66 billion) per month in freshly printed money into the financial system through bond purchases in an attempt to push up weak inflation and support a modest recovery. The eurozone grew 0.3 percent in the last three months of last year; unemployment remains high at 10.4 percent.

In Germany, the eurozone’s largest economy, business executives’ view of current conditions improved but their outlook for the next half-year worsened significantly.

Economist Carsten Brzeski at ING-DiBa called the reading a “wake-up call.”

“Global events have finally reached German companies’ boardrooms,” he wrote in an email research note.

The euro fell in currency markets, from around $1.1040 to under $1.10 before rebounding slightly.

The German survey indicated executives share worries about the global economy that have sent financial markets lower recently. China’s economy is slowing down, with unpredictable consequences for the rest of the world, while low oil and commodity prices have hit emerging market economies that supply much of the world’s growth these days. Financial market turmoil itself could have an impact by making businesses cautious about risking more investment in production.

The Ifo index is valued as a guide to where the economy is headed. The survey is based on monthly responses from about 7,000 firms.

Germany, the biggest economy in the 19-country euro currency union, is enjoying low unemployment of 4.5 percent and steady growth of 0.3 percent in the fourth quarter of last year. While exports have slowed, spending by consumers and the government has picked up.

The French confidence index slipped due to declining confidence among retailers. Manufacturing held up, suggesting global headwinds were not yet severely affecting the country’s gradual recovery.

Analyst Chantana Sam at HSBC Global Research said the fall in retail confidence could suggest that the impact from the terror attacks that left 130 people dead in November was lingering more than expected. Retail confidence remains below the level seen before the attacks.

Analysts say the ECB could try to help the economy by increasing its bond-buying stimulus program. It could also cut the interest rate on deposits it takes from commercial banks, currently minus 0.3 percent. The negative rate is a drastic step aimed at pushing banks to lend money rather than let it pile up at the central bank’s super-safe overnight deposit facility. The negative rate has also helped push the euro lower against other currencies, helping exporters. TVJ

source: business.inquirer.net