HONG KONG: Asian markets rose on Wednesday as traders brushed off a retreat on Wall Street with attention turning to the release later in the day of minutes from the Federal Reserve’s most recent policy meeting.
Trading floors have calmed down since the wild volatility that greeted the start of February, which was caused by concerns about the impact of higher US interest rates and Treasury bond yields.
While New York’s three main indexes ended in negative territory on Tuesday, Asian dealers were in an upbeat mood, helping the dollar recover from recent losses against the yen and holding its own versus the euro and pound.
In morning trade Hong Kong was up 0.9 percent, while Tokyo’s Nikkei was 0.6 percent higher by the break.
Sydney gained 0.1 percent, Singapore put on 0.4 percent and Seoul was up 0.3 percent. Wellington climbed 1.4 percent and Taipei returned from a week-long Lunar New Year break to jump 2.6 percent.
Shanghai remained closed for the holidays.
The Fed minutes will be closely pored over for clues about the thoughts of policy board members as US inflation edges up, wages improve and Donald Trump’s tax cuts come into play.
Stephen Innes, head of Asia-Pacific trading at OANDA, said: “US equity markets fell overnight on the back of higher US Treasury yields which are providing investors with more income than dividends on the S&P 500 Index.”
However, “while the prospect of higher interest rates will keep investors on edge, it’s not like we’re returning to double-digit levels”.
He added that even a rise in key US 10-year yields to 3.25 percent is “unlikely to kill the equity market rally as the benefits from fiscal stimulus should continue to feed through the markets. Investors are banking on much higher returns from equities than bonds again in 2018”.
On oil markets both main contracts edged down on Wednesday after a recent run of gains as the dollar edges slightly higher, while analysts say the output cap led by OPEC and Russia is helping to dwindle the global glut that hammered prices in previous years.
Key figures around 0230 GMT
Tokyo – Nikkei 225: UP 0.6 percent at 22,064.55 (break)
Hong Kong – Hang Seng: UP 0.9 percent at 31,150.62
Shanghai – Composite: Closed for public holiday
Euro/dollar: UP at $1.2337 from $1.2336 at 2200 GMT
Pound/dollar: UP at $1.3997 from $1.3995
Dollar/yen: UP at 107.65 yen from 107.32 yen
Oil – West Texas Intermediate: DOWN 41 cents at $61.38 per barrel
Oil – Brent North Sea: DOWN 37 cents at $64.88 per barrel
New York – DOW: DOWN 1.0 percent at 24,964.75 (close)
London – FTSE 100: FLAT at 7,246.77 (close)