Asian stocks were off to a rough start on Thursday after the Dow closed above 22,000 and the dollar hit 15-month lows against the euro overnight. Traders worried that the gains would not be sustainable despite run of positive earnings reports as technical indicators were sowing upcoming signs of struggle. Specifically, the number of winning stocks relative to losers is weakening even as U.S. indexes continue to remain near record highs. The Nasdaq and S&P 500 index both closed flat on Wednesday.
In Asia, South Korea’s Kospi was down 1.99 percent in early trade and the Shanghai Composite was down 0.15 percent. Australia’s ASX 200 eased 0.37 percent.
Currency Struggles and Surges
Despite the excitement surrounding the Dow’s record highs, the dollar continues to weaken against its prime trading partners. The dollar index hit a low of 92.548 .DXY overnight before rebounding slightly to 92.97 .DXY as of 10:29 a.m. HK/SIN. The dollar was down to 110.60 against the yen, but it was slightly higher against the euro in early trade, with the euro at $1.1841 to the dollar.
The dollar’s struggles have been caused by political turmoil in Washington as well as lukewarm inflation data which has reduced the possibility of another interest rate hike which was originally expected. Traders are now watching the jobs reports due Friday which, based on ADP’s reports, are expected to show the addition of 178,000 jobs, up from 158,000 in June.
The British pound hit a 10-month high of $1.23336 in advance of the Bank of England’s monetary policy announcement which will be delivered on Thursday during the London trading session.
Oil prices gained nearly 1 percent overnight before retreating slightly on Thursday morning. Brent crude futures were at $52.18 per barrel, down 0.34 percent and U.S. WTI futures were at $49.43 per barrel, down 0.32 percent.