Market Rumours

The Nikkei average slid more than 2 percent on Thursday below the 10,000 mark for the first time in three weeks, as a stronger yen hurt shares of exporters and after weak new U.S. home sales data sparked a broad sell-off on Wall Street.Optimism about a recovery in the economy appears to be suffering a correction in the United States. A drop in home sales is a big negative factor for the market," said Takahiko Murai, general manager of equities at Nozomi Securities."Another factor is the unwinding of positions by hedge funds, eying their earnings season... They seem to be unwinding long positions in risk assets such as commodities and stocks."

EUR/USD, EUR/JPY falling, with Japan investors eyed selling probably due to risk aversion since Japan stocks falling (Nikkei last down 2.2%), say senior dealers at major banks in Tokyo. EUR/USD may fall to 1.4600 vs last 1.4694, while EUR/JPY may fall to 132.50 vs last 132.90. "I still believe the current declines in the euro are big position adjustments because the pace of the euro rising above $1.5 was astonishingly fast. So, I don't think this declining momentum will last long, but just for now, it's difficult to keep holding (euro) long positions," says Hiroshi Maeba, senior dealer at Nomura Securities. USD/JPY also falling, may fall to 90.00 vs last 90.45

China’s sovereign wealth fund has invested about half its $110bn of available capital in overseas stocks, mining, energy and real estate, earning returns that have been “not bad” so far, the head of the fund said on Wednesday.But Lou Jiwei, chairman of China Investment Corp, warned that a “small bubble” had formed in global asset prices and said that the fund was focused on investments in commodity-related assets and real estate as a hedge against inflation and currency depreciation.