Asian shares hovered near last week’s lows on Monday as a Chinese seizure of a U.S. underwater drone added additional pressure to already uncomfortable Sino-U.S. relations. China agreed on Monday to return the drone. President-elect Donald Trump’s harsh stance on China has already weakened relations between the nations while the strengthening dollar has put pressure on the yuan. The Chinese currency hit 8 ½ year lows last week, falling to 6.9616 against the dollar. The yuan has fallen more than 6 percent against the greenback this year.
Chinese government researchers on Monday announced that the country’s economy will grow approximately 6.5 percent in 2017, while the yuan will continue to decline. The country’s economy has grown 6.7 percent for the first three quarters of 2016, the slowest growth rate for the country in over 25 years.
Monday’s Markets
Japan’s Nikkei 225 index eased 0.2 percent on Monday, breaking 11 straight sessions of gains, while the MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1 percent to hit a four-week low. Hong Kong’s Hang Seng index was down 0.77 percent. On the currency markets, the euro recovered slightly from last week’s 13-year low, trading at $1.0459 on Monday. The dollar traded at 117.59 against the yen, down from Thursday’s 10 ½ month high. The Malaysian ringgit hit 4.477 against the dollar, a rate not seen since the 1998 Asian Financial Crisis. The currency has been struggling since the dollar’s post-election rally.
Oil prices rose slightly during Monday’s Asian session, with U.S. crude up to $52.34, a 0.85 percent rise. International Brent futures were up 0.67 percent to $55.58 per barrel.
Investors are now looking towards the Bank of Japan’s two-day policy meeting which began today as well as Hong Kong’s November unemployment numbers which are expected out soon.