Asian stocks track Wall St rally after US data

Asian markets rose on Thursday (Oct 6), while the dollar strengthened further on growing expectations the US will hike interest rates by the end of the year.

Another round of positive data out of Washington, this time on the key services sector, reinforced views that the world’s top economy is back on track and able to deal with the impact of tighter borrowing costs.

“Data has been consistent with the Fed moving in December,” Chris Green, the Auckland-based director of economics and strategy at First NZ Capital Group, said.

“The Fed has a delicate balancing act,” he told Bloomberg News. “They’d want to normalise rates as the economy improves but at the same time they don’t want to scare the financial system.”

Mitsushige Akino, an executive officer at Ichiyoshi Investment Management, added: “A December hike will happen for sure.”

US markets rallied Wednesday after the Institute for Supply Management said the services sector expanded at its fastest rate in almost a year in September, rebounding from the previous month’s slump.

The prospects of US rates tightening within three months has rallied the dollar, which bought ¥103.71 in Tokyo – slightly up from late in New York and sharply higher than the levels below ¥103 earlier Thursday in Asia.

DOLLAR EXTENDS GAINS

Japanese exporters welcomed the weaker yen, sending the Nikkei in Tokyo 0.5 per cent higher for its fourth-straight gain.

Hong Kong added 0.7 per cent – marking a fourth-straight gain – and Sydney closed 0.6 per cent higher while Singapore gained 0.1 per cent.

Seoul rose 0.6 per cent, with market giant Samsung Electronics soaring to a record high as the firm said it would review a proposal by US hedge fund Elliott Management to split it into two companies.

Shanghai is closed for a week-long public holiday.

In early European trade London added 0.1 per cent, while Paris and Frankfurt each rose 0.3 per cent.

The greenback was also at three-decade highs against the pound, which has been hammered this week after Prime Minister Theresa May set a timeline for Britain to exit the EU by 2019.

However, her comments suggesting she was not a fan of the Bank of England’s loose monetary policy of bond-buying provided some lift to sterling, which also managed to edged up against the euro slightly – though it is still at five-year lows.

The euro has also been given some lift by a report that the European Central Bank is considering winding down its own stimulus programme.

On oil markets both main contracts dipped in Asian trade, having enjoyed a healthy pick-up Wednesday on data showing a surprise drop in US inventories last week.

WTI and Brent each rose about a dollar on the news as the commodity sees some new life after last week’s OPEC agreement to cut production.

Brent is now above the crucial US$50 mark that makes drilling cost-effective for companies, while WTI is also approaching the figure.

– Key figures at 0800 GMT –

Tokyo – Nikkei 225: UP 0.5 per cent at 16,899.10 (close)

Hong Kong – Hang Seng: UP 0.7 per cent at 23,952.50 (close)

Shanghai – Composite: Closed for holiday

London – FTSE 100: UP 0.1 per cent to 7,039.76

Pound/dollar: DOWN at US$1.2716 from US$1.2750 Wednesday

Euro/pound: UP at 88.03 pence from 87.91 pence

Euro/dollar: DOWN at US$1.1194 from US$1.1208

Dollar/yen: UP at ¥103.71 from ¥103.53

Oil – West Texas Intermediate (November): DOWN 40 cents at US$49.43 per barrel

Oil – Brent North Sea (December): DOWN 44 cents at US$51.42

New York – DOW: UP 0.6 per cent to 18,281.03 (close)

Courtesy : channelnewsasia