Risk appetite dominated the Asian markets with the Yen, Dollar and Swiss Franc strengthening against majority of their peers as tensions in Egypt led to investors locking their money in wealth preservation assets. Asian stocks declined, extending their biggest slump in two months as Egypt tensions entered its sixth day and earnings reports disappointed investors. The MSCI Asia Pacific Index dropped 1.1%, Nikkei dropped 1.2%, and Hang Seng dropped 1.1% while the Shanghai Composite rose 1% also as Fujitsu cut its profit forecast and earnings from Ford and Amazon.com on Friday were weaker. Tensions from Egypt are leading to investors moving to safer assets and there could be a possibility of the risk transferring to oil producing nations.
The Dollar, Yen and the Swiss Franc strengthened across the board as the EURJPY dropped to a one-week low of 111.42, EURCHF dropped to lowest in two weeks of 1.2781, EURUSD dropped to 1.3571, lowest in a week, AUDJPY fell to lowest in eight-weeks of 80.98, AUDUSD fell to 0.9921, NZDUSD fell to 0.7718, lowest in a week as home building approvals declined 19% in New Zealand and trade deficit widened to $192 Million. There are strong concerns that the current Egypt crisis could spread to other Gulf nations which could disrupt oil supply and destabilize the Middle East.
In other news, Japan's industrial production gained the most in 11 months by 3.1% (prev. 1%) as output increased in transport equipment and electronic parts industries, Japan's economic growth is poised to accelerate this year after shrinking last quarter due to expiration of government subsidies to encourage consumer spending. The GDP is expected to contract 0.75% last quarter while 2010 YoY industrial output gained 15.9%. The RBA said that central bank loans to companies rose 0.2% (exp. 0.3%), inflation rose 0.4% (prev. 0.2%) and the RBA is scheduled to meet tomorrow to discuss the outlook for inflation in view of the flood crisis and are expected to leave the interest rate unchanged at 4.75% keeping the Aussie weaker.
Germany releases Retail Sales data, Canada releases GDP report, US releases personal consumption, personal income, personal spending, Chicago Purchasing Manager index and Dallas Fed. Manufacturing index and the ECB publishes January monthly report.