Asia stocks rise as Fed minutes spur optimism; dollar weakens


Asian stocks rose and the greenback languished near two-month lows on Thursday after minutes of the US Federal Reserve’s latest meeting showed policymakers were in no rush to raise interest rates.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4 per cent as investors added to positions after a 14 per cent rise over the last two months.

Technology stocks, especially Tencent and Lenovo Group, led the index higher.

Hong Kong shares was the top gainer in Asia with a one per cent rise, while a stronger yen, thanks to the Fed’s cautious outlook, pulled Japan’s Nikkei back 0.5 per cent.

The July meeting minutes released on Wednesday showed that Fed policymakers were generally upbeat about the US economic outlook and labour market. But they also said they wanted to “leave their policy options open” as any slowdown in hiring would argue against near-term monetary tightening.

Market participants interpreted the minutes as moderately positive for risk-taking appetite, with the Fed remaining divided on the timing of the next rate hike. Futures contracts dipped slightly, signalling receding bets of a US rate increase.

“There is clearly strong disagreement within the Fed with regards to the timing of further rate hikes,” wrote Angus Nicholson, market analyst at IG in Melbourne.

Bond markets greeted the Fed minutes with cautious optimism, with the iShares iBoxx $ High Yield Corporate Bond exchange-traded fund poised to set a fresh one-year high.

Ten-year Australian government debt edged lower to 1.92 per cent, about 100 basis points down from end-2015.

In currency markets, the dollar was down 0.5 per cent at 99.71 yen, nearing a post-Brexit low of 99.55 hit on Tuesday.

The euro edged up 0.2 per cent to $1.131 with the common currency on track to rise more than one per cent this week. The dollar index dipped 0.1 per cent to 94.49, having lost about 0.7 per cent so far this week, during which it touched a seven-week low of 94.426 on Tuesday. The greenback felt the sting of lower US Treasury yields, which fell overnight following the release of the Fed minutes. The weaker dollar was an additional help to commodities like crude oil though oil prices dipped in early trading on the prospect of record Saudi output.

International Brent crude oil futures were at $49.67 per barrel at 0050 GMT, down 18 cents from their last close.

Copper, which had slid on the dollar’s rise earlier in the week, trimmed some of their losses as the US currency flagged. Benchmark copper on the London Metal Exchange was up 0.25 per cent at $4,786 a tonne after losing 0.8 per cent on Wednesday.