Bullish yen weighs on Japan stocks, oil buoyant as dollar sags

Thomson ReutersA man walks past an electronic board displaying the Nikkei average outside a brokerage in Tokyo, Japan

By Shinichi Saoshiro

TOKYO (Reuters) – Asian stocks made a subdued start on Tuesday, with Japanese shares dipping on a bullish yen, while commodities such as crude oil stood tall thanks to a sagging dollar.

MSCI’s broadest index of Asia-Pacific shares outside Japan was effectively unchanged.

Japan’s Nikkei dipped 0.3 percent, while Australian shares inched down 0.1 percent. South Korea’s Kospi was flat.

Caution as the U.S. earnings season got underway was expected to cap risk assets this week. Metals company Alcoa Inc on Monday reported a lower quarterly profit, with results hurt by factors like low commodity prices.

“Alcoa kicked off the earnings season in weak fashion and the U.S. banks are reporting over the next few days, which markets typically take as a bellwether of the rest of the season,” wrote Sam Tuck, senior FX strategist at ANZ.

“Markets are expecting a tough reporting season, which will ensure they remain skeptical on the improvements in the global backdrop.”

U.S. crude oil fetched $40.19 a barrel after rising to a three-week high of $40.75 on Monday. Brent crude popped above $43 a barrel to a four-month peak overnight.

The dollar’s recent depreciation has boosted commodity prices and crude was lifted higher by hopes that oil producers would agree to curb output at a meeting in Doha next Sunday.

A weaker greenback favors non-U.S. buyers as dollar-denominated commodities become cheaper.

Spot gold also touched its highest level in almost three weeks overnight, while silver and platinum were up more than 2 percent.

The dollar was steady at 107.93 yen , not too far from a 17-month low of 107.63 struck on Monday. The dollar index stood at 93.966, hovering near an eight-month trough of 93.748 plumbed overnight.

The U.S. currency has been on the back foot since Federal Reserve Chair Janet Yellen last month doused expectations for hikes in U.S. interest rates anytime soon.

Commodity-linked currencies stood firm as commodity prices rose. The Australian dollar was steady at $0.7595 after gaining 0.6 percent overnight. The Canadian dollar was at C$1.2911 per dollar following a rise of 0.7 percent on Monday.

(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)

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