Asia builds on global rally as interest rate fears ease
AFP – Asian markets picked up Monday where they left off last week, with gains across the board as investors tracked a healthy lead from Wall Street.
The advances helped take another bite out of the big losses suffered at the start of February, which was caused by concerns over the impact of rising inflation that could lead to higher US interest rates.
Those worries were eased somewhat Friday when the Federal Reserve, in its semi-annual report to Congress, said inflation remains subdued globally and it expects to lift borrowing costs three times this year — tempering speculation it could make four hikes.
However, analysts warn that equity valuations remain elevated and volatility could still return.
Monday’s positive start comes at the start of a busy week, with the release of key US data including economic growth, jobs creation and wages.
Also, new Fed boss Jerome Powell will speak before a key finance committee, which markets will be poring over for clues about his plans for monetary policy — though many predict he will stick to the path of his predecessor Janet Yellen.
Powell "looks like he is on track to keep the Yellen strategy — so gradual rate rises this year", Stephen Halmarick, head of global markets research at the Commonwealth Bank of Australia, told Bloomberg TV.
All three main Wall Street indexes powered higher Friday, with the Dow up 1.4 percent, S&P 500 up 1.6 percent and Nasdaq 1.8 percent up.
Those gains filtered through to Asia. Tokyo ended the morning 0.8 percent higher, Hong Kong added 0.5 percent and Sydney climbed 0.5 percent. Shanghai rose 0.2 percent, Seoul edged up 0.2 percent and Singapore put on 0.4 percent.
Wellington and Taipei were also up.
The dollar eased after climbing Friday on the back of the Fed comments, with the yen and pound rallying. However, the euro’s gains are being tamed by uncertainty ahead of weekend elections in Italy, one of the eurozone’s biggest economies.
High-yielding units were also sharply up.
Oil prices were mixed as a surprise drop in US stockpiles was offset by comments from Saudi Arabia’s oil minister that an output cap in place by OPEC and Russia could be eased next year.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.8 percent at 22,072.07 (break)
Hong Kong – Hang Seng: UP 0.5 percent at 31,431.58
Shanghai – Composite: UP 0.2 percent at 3,295.59
Euro/dollar: UP at $1.2310 from $1.2296 at 2130 GMT
Pound/dollar: UP at $1.3400 from $1.3968
Dollar/yen: DOWN at 106.55 yen from 106.83 yen
Oil – West Texas Intermediate: DOWN four cents at $63.51 per barrel
Oil – Brent North Sea: DOWN 13 cents at $67.18 per barrel
New York – DOW: UP 1.4 percent at 25,309.99 (close)
London – FTSE 100: DOWN 0.1 percent at 7,244.41 (close)