Asian shares were dim on Wednesday after US President Donald Trump’s State of the Union speech failed to give markets fresh trading a boost, while the Australian dollar fell after the central bank opened the door to a possible rate cut.
MSCI’s broadest index of Asia-Pacific shares outside Japan barely moved with China and several other markets in the region still closed for the Lunar New Year holiday.
Japan’s Nikkei gained 0.3, while E-Mini futures for the S&P 500 were higher. Australian shares advanced half a percent, rising for a third session.
The Australian dollar fell more than 1 percent to hit a one-week low of $0.7153 after Reserve Bank of Australia (RBA) Governor Philip Lowe said the central bank was positive about the economic outlook but acknowledged rates might go down if unemployment were to rise and inflation stay too low.
“Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the probabilities appear to be more evenly balanced,” he said in a speech in Sydney.
Chris Weston, Melbourne-based head of research at foreign exchange brokerage Pepperstone, said the comments show the RBA will react when it needs to though the bar to cutting rates remained high.
Trump in his State of the Union speech on Tuesday, said he would build a border wall that would be a source of a deep partisan divide and said that democratic attempts at “ridiculous partisan investigations” could damage US prosperity.
Nick Twidale, chief operating officer at Rakuten Securities in Sydney added that investors were hoping Trump would offer evidence of real, concrete progress in the US-China trade negotiations
He also said that the market had hoped that he would come up with something more concrete but they didn’t get it,”
He added that they got a lot of positive rhetoric and backslapping, or self-backslapping and they had a subdued reaction.
Senior US and Chinese officials are ready to start another round of trade talks in Beijing next week to push for a deal on American intellectual property and avert a March 2 increase in US tariffs on Chinese goods said a few sources.
Dow Jones reported earlier that the talks would be led by US Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin.
Wall Street had strong gains courtesy of strong corporate results from Europe and the US, including a blockbuster from Estée Lauder Cos Inc.
The Dow ended Tuesday up 0.68 percent, while the S&P 500 gained 0.47 percent and the Nasdaq 0.74 percent.
Treasury bonds also bounced, helped by data showing a surprisingly soft US service sector index of 56.7, with new orders falling to a one-year low.
Dallas Fed President Robert Kaplan said the Federal Reserve must leave interest rates where they are until the US economic outlook is clearer.
The dollar stood firm but a retreat for the sterling, which hit two-week lows at $1.2923 in early trade after poor survey data and uncertainty about Brexit talks pushed it below a key market level.
Against a basket of currencies, the dollar was steady at 96.104 and well above last week’s low of 95.162. It fell 0.1 percent on the yen to 109.84.
The euro slipped to $1.1397 after a survey showed on Tuesday that euro zone businesses expanded at their slowest pace since mid-2013 at the beginning of the year.
In commodity markets, the Wall Street Journal reported Saudi Arabia and its Persian Gulf allies were proposing a formal partnership with a 10-nation group led by Russia. This would maintain the global oil market. This alliance could be a game changer.
US crude futures fell down 1 cent to $53.65, while Brent was off 2 cents at $61.96.
Spot gold was higher at $1,315.00 per ounce, about 0.9 percent short of its recent peak at $1,326.30.
