Asian Shares Broadly Lower on Fed Comments, ECB Tapering Talk
October 05 2016 - 12:20AM
Dow Jones News
Asian shares traded slightly lower early Wednesday, as concern
shifted to the likelihood of a U.S. Federal Reserve rate increase
by the year's end.
Australia's S&P/ASX 200 was down 0.5%, Korea's Kospi
declined 0.1%, Singapore's FTSE Straits Times Index was off 0.2%
and Taiwan's Taiex was off 0.1%.
In Hong Kong, the Hang Seng Index reversed early losses and was
last up 0.5% amid light trading volumes, with mainland Chinese
markets shut for the week.
The broad weakness in Asian stocks followed comments overnight
by a Fed official stating that the central bank should
pre-emptively raise short-term interest rates to stave off
accelerating inflation.
"While inflation pressures may seem a distant and theoretical
concern right now, prudent pre-emptive action can help us avoid the
hard-to-predict emergence of a situation that requires more drastic
action after the fact," said Federal Reserve Bank of Richmond
President Jeffrey Lacker.
Mr. Lacker's remarks helped boost the U.S. dollar, though it was
relatively stable against most Asian currencies on Wednesday.
"The Fed is obviously the main game in town," said Chris Weston,
chief market strategist at IG. "All these central banks have been
doing a great job in subduing volatility," but investors are
looking to position portfolios beyond central-bank policy.
Overnight, Bloomberg reported that policy makers at the European
Central Bank reached an informal consensus to wind down bond buying
gradually.
The ECB subsequently denied that the governing council had
discussed the subject.
In Japan, however, investors appeared to brush aside the
tapering concerns, with the Nikkei Stock Average last trading up
0.6%.
Among big caps, Toyota Motor rose 1.3%, while Nissan Motor added
2.1% and Honda Motor gained 2.5%, thanks to a slightly weaker yen
against the dollar.
Japanese financial stocks rose, too, with expectations that
higher interest rates would boost yields. Sumitomo Mitsui Financial
Group rose 1.3% and Dai-ichi Life Holdings added 2.6%.
Meanwhile, gold prices remain well below a key psychological
level of $1,300 per troy ounce in Asia trade, after falling below
the level overnight due to a stronger dollar.
"In the past four months, gold always rebounded whenever prices
came close to $1,300 per ounce," said Gnanasekar Thiagarajan, a
director of Commtrendz Risk Management. He said low prices will
likely drive Indian festival buying this month.
"In a way, the price fall now is a blessing in disguise," he
said. Gold was last up $4.29 at $1,272.44 an ounce.
Looking ahead this week, investors in Asia will be eyeing ISM
nonmanufacturing data and jobs figures from the U.S., the strength
of which will further support the case for an interest-rate
increase soon.
-Biman Mukherji and Kosaku Narioka contributed to this
article.
Write to Willa Plank at willa.plank@wsj.com
(END) Dow Jones Newswires
October 05, 2016 00:05 ET (04:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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