Asian Market Update – Thursday: Bitcoin on fire; Asian stocks mixed on increased risks

05:15 07/12/2017

The Big Question: Where will bitcoin end the year?

Bitcoin posted yet another extreme surge yesterday, with the gains continuing in early trading on Thursday. Bitcoin climbed from about $12,664 at midnight on Wednesday all the way to $14,376 at 8 AM in Hong Kong, reaching a fresh all-time high in a strong way and on high volume. At midday in Hong Kong, the price of bitcoin was up about 1 percent for the day to $14,280.

With the $10,000 price target for bitcoin for the end of the year already put to shame, many are now wondering where the digital gold will close the year.

Ethereum surged back on Thursday morning after a relatively steep fall overnight. As of midday, the cryptocurrency was up 3.15 percent to $446. Though that’s still well below its all-time high, it makes for a solid comeback from the losses seen over the past few days.

Litecoin gained 2.04 percent to $102.05, after dropping below $100 and reaching a low of $98 early in the morning.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,457 1.27%
China-Shanghai Composite Index 3,277 -0.50%
Hong Kong –Hang Seng 28,259 0.12%
South Korea-KOSPI 2,463 -0.45%
Australia-ASX 200 5,980 0.58%
S&P 500 E-Mini Futures 2,637 0.12%

Major Asian equity markets moved higher on Thursday morning, with indexes in Tokyo, Hong Kong and Sydney erasing some earlier losses and indexes in Shanghai and Seoul pointing lower as of midday.

In Tokyo, the Nikkei 225 Index edged up 1.27 percent to 22,457 before midday on Thursday. The gain offset a big chunk of the 1.93 percent loss on Wednesday.

In Hong Kong, the Hang Seng Index turned positive on Thursday morning, gaining a slight 0.12 percent to 28,259 before midday. At market close on Wednesday, the Hang Seng was down 2.14 percent, marking its biggest single day drop so far this year.

Down under, the ASX 200 tacked on 0.58 percent to 5,980 at midday. The index also erased a 0.4 percent loss at the end of session on Wednesday.

The S&P 500 E-Mini Futures was up 0.12 percent to 2,637.

However, markets on the Chinese mainland and South Korea continue to stumble on Thursday morning.

The Shanghai Composite Index lost 0.50 percent to 3,277.

In South Korea, the Kospi also lost 0.45 percent to 2,463 at midday.

Lower risk appetite among investors continue to weigh on indexes across Asia. Investors are looking at developments on the US, a potential shutdown of the US government if a budget can’t be passed soon, and tensions on the Korean Peninsula.

In addition, investors are also watching economic growth and corporate earnings at the end of the year.

Turmoil in the Middle East also intensified after US President Donald Trump announced a decision to recognize Jerusalem as the capital of Israel on Wednesday, and possibly move the US embassy from Tel Aviv to Jerusalem. The announcement prompted immediate backlash from both the Arab world and European leaders. Analysts say the move could result in further conflict in the already highly volatile region.

Currencies

The Japanese yen lost 0.14 percent against the US dollar at midday Thursday, changing hands at 112.44 per dollar.

The Chinese yuan was flat against the US dollar at 6.6138 per dollar.

The Australian dollar lost 0.14 percent on the dollar, changing hands at 1.3237 per dollar at midday.

Commodities

WTI Oil was up 0.3 percent to $56.12 per barrel.

Brent Crude gained 0.33 percent to $61.43 per barrel.

Gold was up 0.02 percent to $1,263 an ounce.

News across Asia

In China, an IMF report released on Wednesday said that China should focus more on financial stability rather than growth objectives, noting lack of coordination and inadequate systemic risk analysis. The PBoC on Thursday pushed back on the findings, saying that the IMF report does not paint a full picture of the conditions and claimed that China is able to fend off risks.

Take away: As the Chinese economy continue to slow down and financial risks are mounting, the Chinese government has been under heavy pressure to both boost growth and contain financial risks, a difficult balancing act in China.

In North Korea, a US-South Korea military drill that saw bombers fly over the Korean Peninsula on Wednesday has drawn strong criticism from the North. According to the North Korean foreign ministry, these actions by the US and South Korea make war “inevitable.”

Take away: Threats from the North are common, but the risk of a devastating war is still higher than ever on the Korean Peninsula.

Featured image from Pixabay.

Disclaimer: The author owns bitcoin, ethereum and litecoin. He holds investment positions in the coins, but does not engage in short-term trading.