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 The early action was in currencies, where the yen resumed its long
decline as investors used it to fund purchases of higher-yielding
assets abroad.
The drop in the yen has been viewed as positive for Japanese exports
and corporate earnings, and a major reason its share markets
outperformed all others last year.
Japan's Nikkei <.N225> was closed on Thursday but ended 2013 with an
annual gain of 57 percent. Many analysts look for a further advance
this year as the Bank of Japan remains committed to its massive
stimulus campaign.
Nomura's global strategy team is forecasting that Japanese equities
will provide the greatest return of all global stocks in 2014,
thanks in large part to rising corporate earnings.
They see the Nikkei at 18,000 by the end of this year, up from the
current 16,291, and said even 25,000 was possible by 2018 should
Prime Minister Shinzo Abe's aggressive economic program prove
successful in defeating deflation.
Asian markets outside of Japan had a much more mixed performance in
2013, partly because investors rediscovered the attractions of
assets in Europe and the United States.
MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> ended last year essentially flat, which was where it
was at on Thursday. Korean shares <.KS11> eased 0.3 percent, as did
stocks in Shanghai <.SSEC>.
Not helping was a drop in China's official Purchasing Managers'
Index (PMI) to 51.0 in December, from 51.4 the previous month and
below forecasts for 51.2. <TOP/CEN>
Analysts at Barclays noted the pullback of activity in the survey
was broad-based across industry sectors and sizes.
"Besides the need for deepening reforms and addressing structural
issues such as reducing overcapacity and controlling local
government debt, we think elevated interest rates across the money,
bond and credit markets have led to higher funding costs, hurt
corporate sentiment and thus weigh on economic growth," they wrote
in a client note.
They expected China's central bank to maintain its tightening bias
for a while yet.
Better news came from South Korea where manufacturing activity
picked up to its strongest level in seven months.
YEN HEADING LOWER
A slew of manufacturing indices for Europe and the U.S. are due out
across Thursday which will offer a better idea of how global
industry was faring into the end of the year.
[to top of second column] |
Markets reacted to the China data by knocking the Australian dollar
down a quarter of a U.S. cent. China is Australia's single biggest
export market and the currency is often used as a liquid proxy for
risk in the Asian giant.
For other major currencies the main themes continued to be
weakness in the yen and resilience in the euro.
The common currency was up at 144.97 yen having clocked up gains of
26 percent over 2013 to reach a five-year peak of 145.67. The dollar
was likewise firm at 105.32 yen having climbed 21 percent last year.
The euro was a shade softer on the dollar at $1.3763, but still not
far from its recent two-year peak of $1.3892.
Dealers suspect the single currency has been supported by the
repatriation of funds by European banks and a large and expanding
current account surplus in the euro zone.
But there remains a general assumption rising U.S. Treasury yields
will eventually lift the dollar up on the euro. Yields on U.S.
10-year paper are up at two-and-a-half year highs of 3.03 percent.
Even shorter-dated rates have been rising as improving U.S. economic
data justifies the Federal Reserve's decision to start tapering its
asset-buying stimulus.
Outgoing Fed Chairman Ben Bernanke is giving a speech on Friday and
may offer more guidance on the outlook for tapering.
In commodity markets, gold recouped a little of its recent losses to
stand at $1,211.80 an ounce, though that follows its biggest annual
loss in three decades.
U.S. oil Futures were trading 28 cents higher on Thursday at $98.67
a barrel, while Brent added 26 cents to $111.06.
(Editing by John Mair and Eric Meijer)
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