Asian stocks eased today, pulling further away from 13-month highs hit last week, as investors worried prices may have raced too far ahead of economic fundamentals, with shares in China feeling supply pressures ahead of a string of IPOs.
Major European and US stocks futures were lower, pointing to a weaker opening in their respective markets. Futures on the Dow Jones Euro Stoxx 50 were down 0.2 per cent while US equity futures were 0.15 per cent lower.
In South Korea, the influx of foreign money into stocks boosted the won to an 11-month high, forcing authorities to intervene in order to check the currency's strength and prevent a decline in the country's export competitiveness.
The US dollar extended last week's gains with traders covering their short positions ahead of this week's Federal Reserve policy meeting and a Group of 20 summit.
The dollar, measured against a basket of currencies, was up 0.55 per cent at 76.845 by late afternoon, off a one-year low of 76.01 struck on September 17th.
That rise pulled gold away from near 18-month highs to a one-week low of below $1,000 per ounce. The yellow metal has gained 16 per cent so far in 2009 but has still failed to top its all-time peak of $1,030 an ounce struck last year.
Trade was sluggish and volumes are on the lower side in Asia with Japan shut until Thursday for holidays. Markets in Singapore, India, Indonesia, Malaysia and the Philippines were also shut on Monday for holidays.
The MSCI index of Asia Pacific stocks traded outside Japan dipped 0.3 per cent, after surging 80 percent since mid-March when global markets started to rally on hopes that the financial crisis had bottomed out.
This has taken price-earnings multiples on a 12-month forward basis to above 15.2 times, near this year's high of 15.5 struck in early August, according to data from global estimates tracker Thomson Reuters I/B/E/S.
Highlighting investor skittishness, shares in Shanghai fell more than 3 percent at one point before edging back into positive territory by late afternoon.
The decline was sparked by concerns about a sharp increase in shares from upcoming IPOs and amid worries the recent gains may be overdone.
Analysts said subscriptions for 10 companies to be listed on China's Nasdaq-style market to fund high-growth start-ups had come faster than expected and could lead to a mild consolidation for the index.
South Korean stocks also eased 0.3 per cent after a four-session gaining streak with foreigners piling into the country's markets ahead of South Korea's upgrade to developed market status by FTSE effective today.
The Korea Composite Stock Price Index (KOSPI) was down 0.25 per cent after dropping 0.5 per cent to the day's low in early trade.
The won currency was lifted by these inflows, rising to 1,199.9 per dollar, the highest since October 14th, 2008.
Still, valuations in South Koreana stocks look relatively attractive.
The KOSPI's price multiple based on 12-month forward earnings estimates was about 9.7 as of September 18th, compared with the region's multiple of over 15 times.
Australia's benchmark S&P/ASX 200 index dropped 0.34 per cent, led lower by weak resources stocks which were in turn depressed by softer commodity prices.
Reuters