US and Europe weakness may weigh on Asian markets

More losses are expected for Asian stocks today given weak offshore leads.

We continue to watch the copper price very closely and having failed to breach above US$3.60/lb last week, the price now looks set to test US$3.30/lb. Copper is a key indicator of industrial activity, particularly in China which is a significant marginal consumer. The copper price was down another 2.1% overnight.

In equity markets, nine out of 10 industry groups on the S&P500 were down last night. The index on aggregate was 0.9% lower at the close, reversing a 1.1% gain. The market was clearly displeased by the lack of any new stimulus proposed by the US Federal Reserve as 2011 winds down.

In currencies, the Australian dollar is holding just above parity against the U.S. dollar the time of writing, but it could very well fall below throughout the Asian session.

The Japanese Yen also weakened with the USD/JPY trading just shy of 78.00. Japanese exporters will be welcoming the movements but more is needed. A Bank of Japan intervention, if well timed, might see the Yen weaken further should global risk appetite continue to contract.

The Euro also continues to extend its losses against the U.S. dollar, last trading just above 1.30 as sovereign debt issues and the risk of credit downgrades continue to weigh on sentiment.

In Australian corporate news, telco giant Telstra has announced the appointment of a new CFO to commence early next year.

In the financials space, Bank of Queensland’s 12% French shareholders are said to be shopping around to divest their holding.