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May 30, 2017

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Asian shares edge higher ahead of US Fed speech

TOKYO/HONG KONG--Asian stocks got a slight boost Wednesday from positive U.S. economic figures that reinforced expectations of eventual Fed rate hikes and a stronger dollar, while European markets drifted lower ahead of Federal Reserve minutes.

France's CAC-40 slipped 0.4 percent to 4,237.27 and Germany's DAX lost 0.3 percent to 9,302.28. Britain's FTSE 100 fell 0.3 percent to 9,758.86. U.S. shares were poised for declines with Dow futures dipping 0.1 percent to 16,866. S&P 500 futures were down 0.1 percent to 1,974.70. Signs that inflation is in control in the U.S., as well as fairly positive earnings reports and other indicators of a healthy economy, are helping Asian shares. Recent data on housing has reassured regional markets that the U.S. growth is on a relatively solid track. Also helping Asian shares are positive news from Home Depot, the largest U.S. home improvement retailer, which raised its annual profit forecast after reporting strong earnings results.

It's unclear when the U.S. Federal Reserve will start raising interest rates but many analysts predict sometime in 2015. That could be a plus for countries such as Japan, where giant exporter have much to gain from a strong dollar. Eyes are on the release of minutes Wednesday from the last Fed policy meeting and a speech later in the week by Federal Reserve Chair Janet Yellen.

"Traders will turn their attention to the FOMC minutes later tonight, recalling a less-hawkish-than-expected minutes in July, which led to a sell-off in the dollar," said Desmond Chua, market analyst with CMC Markets in Singapore. Traders were also expecting to get more of a clue about when the first interest rate hike might come, he added.

Asian shares mostly edged higher Wednesday following a positive lead from Wall Street, where stocks picked up on encouraging US economic data before a keynote speech this week by the Federal Reserve chief.

The dollar hit multi-month highs against the euro and yen after a surge in US housing construction boosted optimism over the state of the world's number top economy.

Tokyo ended flat, edging up 4.66 points to 15,454.45 after data showed a rebound in exports helped narrow Japan's trade deficit in July. But the shortfall still came in worse than expected after a marked slowdown in the world's number three economy.

Seoul also ended flat, inching up 1.64 points to 2,072.78 but Shanghai slid 0.23 percent, or 5.12 points, to 2,240.21.

Hong Kong stocks closed 0.15 percent higher Wednesday, setting another fresh high for the year and tracking Wall Street's gains on upbeat U.S. data before a key speech this week by the Federal Reserve chief.

The Hang Seng Index, rising for a fourth consecutive day, added 36.81 points to 25,159.76 on turnover of HK$70.37 billion (US$9.08 billion).

Shares in Standard Chartered shed 0.25 percent to HK$158.1 after U.S. regulators slapped the British-based, Hong Kong-listed bank with a US$300 million fine and restrictions on its dollar-clearing business for failing to detect possible money-laundering.

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