Asian shares lifted by Wall Street records

Wednesday, 4 March 2015 00:00 - - {{hitsCtrl.values.hits}}

Reuters: An index of Asian shares edged higher on Tuesday, bolstered by another record day on Wall Street, while a resurgent yen helped knock the US dollar index off an 11-year high. The Australian dollar jumped after the Reserve Bank of Australia held policy steady, confounding investors who had bet it would deliver a back-to-back interest rate cut instead of holding off for a few months to gauge how the economy digested last month’s cut. “Further easing of policy may be appropriate over the period ahead,” the RBA said in a brief post-meeting statement, keeping the door open for easing at forthcoming meetings. Financial spreadbetters predicted modest gains at the open for European bourses, with Britain’s FTSE 100 seen opening 6 points higher, or 0.1%; Germany’s DAX 7 to 8 points higher, or 0.1%; and France’s CAC 40 8 to 9 points higher, or 0.2%. MSCI’s broadest index of Asia-Pacific shares outside Japan added about 0.1%. But Japan’s Nikkei stock average erased early gains and ended 0.1% lower, after the yen rebounded from a three-week low against the greenback touched earlier in the session. Investors took profits from recent gains to 15-year highs, while Sharp Corp (6753.T) dropped on news that it is planning to seek aid from its main lenders as it expects losses to mount this year. China stocks tumbled as investor excitement over a weekend interest rate cut waned, with a flood of new initial public offerings (IPO) fanning concerns about tighter liquidity. The Shanghai Composite Index fell more than 2%. On Wall Street on Monday, the Dow Jones industrial average and the S&P 500 both posted fresh record closing highs, while the Nasdaq Composite broke 5,000 for the first time in 15 years. The Aussie dollar AUD=D4 was last up 0.8% at $ 0.7825 after going as low as $ 0.7751 earlier in the session as some investors bet that the RBA would cut rates. The dollar index climbed as far as 95.516 earlier in the session, its highest since September 2003, but was last down about 0.2% on the day at 95.317. The dollar skidded about 0.4% against the yen to 119.69 JPY=, after touching a fresh three-week high of 120.27 earlier on Tuesday. The yen’s ascent came after an adviser to Japan’s government reportedly said the yen’s correction from its past excessive strength is likely complete. Etsuro Honda, an economic adviser to Japanese Prime Minister Shinzo Abe, told the Wall Street Journal in an interview that dollar/yen may be at the ‘upper limit of comfort zone’. The euro gained about 0.1% on the day to $ 1.1195 EUR=. The dollar’s rise overnight showed the extent to which some investors have begun positioning for the possibility of a near-term rate hike, as it came in spite of a batch of downbeat US data, including another fall in US consumer spending and slower factory activity. “The market’s relentless appetite for US dollars is impressive considering that the latest economic reports hardens our view that the Federal Reserve will raise interest rates in September and not in June,” Kathy Lien, managing director at BK Asset Management, said in a note to clients. The main data focus for the market this week will be Friday’s US jobs report for February. Employers are expected to have added 240,000 jobs in the month, according to the median estimate of 100 economists polled by Reuters. A strong reading is likely to heighten expectations that the Fed will opt to hike interest rates by the middle of this year, and would likely give the greenback a lift. A sharp selloff in Brent crude LCOc1 overnight kept some investors cautious, despite some retracement on Tuesday. Brent added more than dollar, or 1.4%, to $ 60.39 a barrel after plunging as much as 5% in the previous session. US crude CLc1 rose about 0.7% to $ 49.91. Spot gold XAU= recovered as the dollar slipped, adding about 0.2% to $ 1,208.65 an ounce after touching a session low of $ 1,194.90.

Gold falls as dollar holds near 11-year high

Reuters: Gold dropped for a second session on Tuesday, pulling further away from a two-week high as growing expectations for a US interest rate hike kept the dollar near an 11-year peak against a basket of currencies. Bullion fell the most in five months in February, with the Federal Reserve seen on course to lift rates this year for the first time since 2006 amid a generally strengthening US economy led by gains in its labour market. Spot gold fell nearly 1% to a session low of $1,194.90 an ounce and was trading at $1,199.10 by 0241 GMT, down 0.6%. Firm Chinese demand had kept gold above $1,200 since last week, climbing to a two-week top of $1,223.20 on Monday before slipping. US gold for April delivery rose as much as 1.1% to $1,194.60 an ounce and was last down 0.8% at $1,199.10. “Despite the fact that most people are swaying back and forth on the timing of the US rate hike, there is still consensus that it will happen this year,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group. Seven of the Fed’s current 17 members have now said they at least want the option of an interest rate hike in June on the table, or have pushed in general for an earlier increase in expectation that wages and inflation will turn higherThe greenback’s strength, which makes dollar-denominated assets such as gold more expensive for investors holding other currencies, came despite a batch of soft US data including weak consumer spending and factory activity. To at Wing Fung expects gold to trade between $1,180 and $1,220 in the short term, and does not see demand from top consumers China and India providing any lasting support.