Asian shares edged up to a four-month high on Thursday, taking cues from Wall Street gains overnight, as receding worries of near-term US interest rate hikes continued to buoy risk sentiment. The dollar hovered near seven-week lows versus the euro, still gripped by cautious comments from Federal Reserve chair Janet Yellen earlier in the week on monetary tightening.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent, reaching its highest since early December. The index was poised to eke out a gain of 1.2 per cent this quarter, which saw equities rocked earlier by global growth worries, but particularly for the Chinese economy.
Australian stocks added 1.4 per cent and Japan's Nikkei rose 0.2 per cent, on track for an 11 per cent loss on the quarter. Shanghai shares climbed 0.3 per cent, en route to a quarterly drop of 15 per cent. Taiwan stocks edged up 0.2 per cent, led by gains in iPhone assembler Hon Hai Precision after the company approved a deal with Japan's Sharp Corp.
Investor risk appetite has increased since Fed chair Yellen said on Tuesday that the US central bank should proceed cautiously as it looks to hike rates, pushing back against some colleagues who have suggested another move may be just around the corner. “Fed chair Janet Yellen’s speech earlier this week is still dragging the dollar down, sparking risk appetite globally,” said Kim Moon-il, a foreign exchange analyst at Eugene Futures in Seoul. Yellen’s views were echoed by Chicago Fed President Charles Evans, who said on Wednesday there was a high hurdle to raising rates in April, given low inflation.
Following such cautious views from top Fed officials, the Dow climbed 0.5 per cent and the S&P 500 rose 0.4 per cent overnight. The CBOE Market Volatility Index, Wall Street’s “fear gauge”, ended down 1.9 per cent at its lowest level since August. “Global markets are likely to be dominated by month- and quarter-end flows today as markets await tomorrow’s US Institute of Supply Management data, non-farm payrolls and global purchasing managers’ indexes, particularly that of China,” wrote strategists at ANZ.
In currencies, the euro fetched $1.1321, not far from Wednesday’s seven-week peak of $1.1365. The common currency was set for a 4 per cent quarterly rise. The dollar dipped 0.1 per cent to 112.37 yen, headed for 6.6 per cent drop this quarter that saw the safe-haven Japanese currency benefit during bouts of global risk aversion. The greenback’s recent weakness has been a boon to the Australian and New Zealand dollars, which both soared to nine-month highs.
Crude oil prices dipped after US government data showed crude inventories were again at all-time peaks despite strong refinery runs. U.S. crude was down 0.9 per cent at $37.99 a barrel and Brent lost 0.5 per cent to $39.05 a barrel. Oil prices, which fell to 12-year lows earlier this year, have risen about 50 percent since mid-February after major producers floated the idea of freezing production at January’s highs. Some analysts say the rally has breached fundamentals and crude could trade lower. Copper slid as concerns over slowing Chinese demand mounted ahead of Friday’s China official purchasing managers’ index release. Three-month copper on the London Metal Exchange slid to as low as $4,829.50 per tonne, the lowest since March 3rd.
Reuters
