Asian shares down on European Central Bank easing moves

“The domestic stock market may have fluctuated right after the ECB’s decision but will soon return its attention to a more critical issue, which is the imminent USA rate hike”, said Park Seok-hyun, researcher at Eugene Investment & Securities. Japan’s Nikkei average tumbled 1.9%, the biggest daily drop since November 2, and was on track for a weekly loss of 1.7%, the most in three months.

The ECB is also scheduled to publish its latest updated economic projections at the meeting, which analysts said would provide the necessary justification for the additional easing measures.

The ECB move caused a spike in the euro, catching investors by surprise and forcing them to shift positions in most asset classes.

BOND SHIFT: With the ECB not expanding stimulus as much as expected, European bond prices fell sharply, sending yields higher.

USA stock futures extended gains on Friday after stronger-than-expected jobs data showed the economy was strengthening, building the case for an interest rate hike this month.

The euro EUR= jumped 3.1 percent on Thursday, posting its biggest single-day gain since March 2009.

“If an investor only makes his portfolio based on central bank policy, of course there is a disappointment, but there is also a big part of the market which is investing on fundamental data and from this perspective I must say I’m not totally disappointed”.

The yield difference between USA 10-year Treasuries and similar-maturity German bonds narrowed to 1.63 percentage points, the least on a closing basis since October 27. GBP plunged against the majors on Wednesday, falling below long-term support at 1.50 versus the U.S Dollar to a low of 1.4918, while the United Kingdom currency also toiled to a low of 1.4065 against the Euro, down 1.5% from the previous session.

In testimony before a congressional committee Thursday, Fed Chairwoman Janet Yellen signaled the conditions necessary for an interest-rate increase have been met and that she hopes to tighten monetary policy slowly after liftoff. The index shed 2.1 percent on Thursday, its worst performance since March 2009.

Economists forecast that USA employers created 200,000 jobs in November, and the unemployment rate remained steady at 5%. Benchmark U.S. crude was up 1.4 percent at $41.67 a barrel in electronic trading on the New York Mercantile Exchange, while Brent, the worldwide standard, rose 1.8 percent to $44.64. BATTERED DOLLAR The euro’s explosive rally on Thursday knocked the dollar index back to a one-month low of 97.591, from a 12-1/2-year peak of 100.510 scaled midweek on the coattails of hawkish comments from Yellen. Six expected it to decline, two said it would rise, and and two bet it would stay largely unchanged.

Heating oil rose 5.4 cents to $1.359 a gallon, wholesale gasoline rose 0.3 cent to $1.296 a gallon and natural gas rose 1.6 cents to $2.181 per thousand cubic feet.