Asian stock markets fizzle over US Fed uncertainty
HONG KONG: Asian stocks drifted on Thursday, as gains on Wall Street overnight were offset by questions over the US Federal Reserve’s December meeting which signalled more US interest rate rises.
Tokyo shares closed flat on Thursday with the benchmark index losing early gains as Japan’s currency strengthened against the dollar.
A stronger yen “capped the initial rise,” said Yoshihiro Ito, Chief Strategist at Okasan Securities, wrote on his market blog.
The benchmark Nikkei 225 index lost 0.37 per cent, or 73.47 points, to 19,520.69. But the broader Topix index of all first-section issues rose 0.08 per cent, or 1.20 points, to 1,555.68.
The Nikkei opened higher after Wall Street scored gains for the second straight day this year and remaining within striking distance of the 20,000 point milestone.
In Tokyo, shares in struggling auto parts maker Takata dipped following a surge on news last week of an expected settlement over a US criminal probe into exploding airbags. Takata fell 1.19 per cent to close at 995 yen as investors cashed in after it soared 22.44 per cent at one point in the session.
That marked a more than 100 per cent rise since December 28 when the shares started climbing on hopes of a resolution.
Nintendo, meanwhile, was down 1.61 per cent at 24,085 yen, while Sony fell 1.11 per cent at 3,296 yen.
Market heavyweight Fast Retailing declined 1.61 per cent at 42,590 yen.
Shanghai closed slightly up with a boost from oil shares on hopes that recently announced government reforms of the sector would benefit big players, dealers said.
Hong Kong stocks, joining an Asiawide rally, had their biggest gain in eight weeks on Thursday, a day on which the offshore yuan’s surge against the dollar stole the spotlight.
Resource shares helped lift the Hong Kong market, where stocks finished at a three-week high.
The Hang Seng index rose 1.5 per cent, to 22,456.69 points, its best day since November 10, while the China Enterprises Index gained 1.7 per cent, to 9,598.68 points.
The market also drew some support from improved conditions in Hong Kong’s private sector as reflected by the Nikkei Purchasing Managers’ Index (PMI), which in December recorded the first expansion in 22 months.
All sectors advanced in the city, led by energy and raw materials stocks, which added 2.9 per cent and 2.3 per cent respectively.
US central bankers hinted on Wednesday they may need to raise interest rates faster than planned due to “considerable uncertainty” linked to Donald Trump’s fiscal stimulus plans, which could fan inflation, according to minutes of the final 2016 policy meeting at which the Fed lifted rates.
The president-elect’s pledge to slash taxes and ramp up infrastructure spending could boost demand above sustainable levels, “potentially necessitating somewhat tighter monetary policy than currently anticipated,” many participants in the December 13-14 meeting said.
Despite these risks, the minutes repeatedly said the central bank expects it can continue to make only “gradual adjustments” in the interest rate.
The dollar fell as the Fed minutes highlighted concerns about the impact of a strong currency on the new US administration’s stimulatory economic policies.
The greenback changed hands at 115.89 yen by close in Tokyo, down from 117.27 yen in New York late on Wednesday, with the weaker Japanese currency boosting local exporters.
Among Japanese shares, struggling auto parts maker Takata fell as investors sentiment among cashed in after its shares surged on news last week of an expected settlement over a US criminal probe into exploding airbags.