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EMERGING MARKETS-Asian stocks drop, currencies firm as U.S. Senate vote goes down to the wire

Published 06-01-2021, 02:10 pm
Updated 06-01-2021, 02:12 pm
© Reuters.
USD/JPY
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JP225
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USD/MYR
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USD/PHP
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NSEI
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JKSE
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KLSE
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KS11
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TWII
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SSEC
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SETI
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PSI
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TRIM
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ZBRA
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DMC
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STI
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GTCAP
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* Indonesia to impose more targeted COVID-19 curbs

* Philippines, Malaysia and Indonesia shares down 1%

* Asian currencies firm vs weak dollar

By Anushka Trivedi

Jan 6 (Reuters) - Indonesian shares led declines in Asian stock markets on Wednesday on new COVID-19 restrictions, while currencies across the region eked out gains as the outcome of a pivotal U.S. Senate election remained undecided.

Jakarta's index .JKSE tumbled as much as 2.4% after two-week curbs were planned for the country's most populous island of Java and in tourist hub Bali, starting Jan. 11, likely putting more pressure on an ailing economy. Asian equities recovered from session lows, with Manila stocks .PSI recouping from a steep 3% decline to end 1.2% lower. Malaysia .KLSE slipped 0.8% and Taiwan .TWII 0.1%, after shedding more than 1% each earlier.

One of the two seats in the Senate election in Georgia was called for a Democrat contestant, and the markets braced for a "Blue wave" that would hand the party control of the chamber and make it easier for incoming President Joe Biden to pass his legislative agendas. market reaction appears to reflect the potential for higher U.S. taxes and more regulation under a Democrat-held Senate, though this will likely be mitigated by potential for further and larger fiscal stimulus," said Mitul Kotecha, senior EM strategist at TD Securities.

In the long-term, strengthening Asian growth outlook and portfolio inflows should keep providing support to equities, he added.

Foreign inflows into Asian markets accelerated in the second-half of 2020, with Indian equities .NSEI attracting $23 billion. South Korea faced the largest outflows, though the trend changed by November, Refinitiv Eikon data showed.

South Korea's KOSPI .KS11 briefly broke above 3,000 for the first time in early morning trade on Wednesday before giving back gains to fall 0.8%, snapping a seven-day rally. KRW/

Most Asian currencies firmed as the dollar deepened losses on the prospects of a Democrat-controlled Senate encouraging fiscal easing.

The Taiwan dollar TWD=TP surged 1.5%, outperforming its peers, while the Malaysian ringgit MYR=MY , South Korean won KRW=KFTC and the Thai baht THB=TH all advanced 0.2%.

Stronger U.S. fiscal stimulus should support global recovery, thereby helping risk sentiment and weaken the dollar which would lift the Asian currencies, said Wei Liang Chang, a macro strategist at Singapore's DBS Bank.

HIGHLIGHTS

** Indonesian 10-year benchmark yields are up 6.5 basis points at 6.063%​​

** In the Philippines, top index losers are GT Capital Holdings Inc GTCAP.PS down 6.1% and DMCI Holdings Inc DMC.PS down 5.1%

** Top losers on the Jakarta stock index .JKSE include Trimegah Sekuritas Indonesia Tbk PT TRIM.JK and Zebra Nusantara Tbk PT ZBRA.JK , both down 7%

Asia stock indexes and currencies at

0736 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX STOCKS DAILY %

STOCKS YTD % Japan

JPY=

-0.01

+0.50 .N225

-0.38

-1.41 China

CNY=CFXS

-0.02

+1.11 .SSEC

0.63

2.24 India

INR=IN

+0.11

-0.04 .NSEI

0.05

1.61 Indonesia

IDR=

+0.07

+1.08 .JKSE

-1.34

1.27 Malaysia

MYR=

+0.17

+0.32 .KLSE

-1.13

-2.28 Philippines PHP=

+0.02

-0.06 .PSI

-1.21

-1.29 S.Korea

KRW=KFTC

+0.18

+0.06 .KS11

-0.75

3.30 Singapore

SGD=

+0.06

+0.31 .STI

0.04

0.60 Taiwan

TWD=TP

+1.51

+1.80 .TWII

-0.11

1.70 Thailand

THB=TH

+0.17

+0.23 .SETI

-0.12

3.83

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