Tokyo/Hong Kong, 13 September Asian stocks rose today with energy stocks higher as oil held near a record peak above $80, while expectations of an imminent US rate cut pinned the dollar near an all-time low versus the euro.
The weak dollar propped gold near a 16-month high, while strength in stocks and an overnight fall in US Treasuries weighed on Japanese government bonds.
Tokyo’s Nikkei average ended the morning nearly 0.4% higher, erasing Wednesday’s losses sparked by the shock resignation of Prime Minister Shinzo Abe.
MSCI’s measure of Asia Pacific stocks excluding Japan edged up 0.5 % to a six-week high by 0205 GMT.
The MSCI index has risen around 20 % from the five-month trough plumbed on Aug. 17 and was just 5 % below the July 24 life high.
Analysts said Japanese stocks were supported as the reaction of overseas markets to Abe’s resignation had been limited but lingering political uncertainty his successor is selected may keep Japanese equities underperforming .
“We do not believe PM Abe’s sudden departure will impact negatively on the Japanese economy,” said Masuhisa Kobayashi, chief JGB strategist at Barclays Capital, in a research note.
“But it is possible that foreign investors will shy away from investing in Japanese stocks as a result.”
CRUDE NEAR RECORD
Energy stocks rose, with the MSCI index of energy shares in the region excluding Japan 0.5 % higher.
Australia’s Caltex and Santos both climbed around 2 %, while Japan’s INPEX Holdings put on nearly 2 % on expectations that higher crude prices will boost the value of their assets feed through to profits.
US crude hit $80.18 a barrel on Wednesday as investors fretted about tight US inventories and potential supply disruptions from a storm in the Gulf of Mexico. Oil was at $79.69 in early Asian trade.
South Korean stocks were choppy with the key KOSPI up 0.2 %, recovering from earlier losses.
With stock options, stock index options and stock index futures all due to expire at the end of the session -- known also as triple witching -- trading was expected to be erratic.
Hong Kong’s Hang Seng Index jumped as much as around 1 % to a record high in early trade, extending gains made on Wednesday.
But China’s top alumina and aluminium producer, Chalco, tumbled more than 8 % on news Alcoa Inc sold its stake in the Chinese firm for about $2 billion.
The dollar traded near a record low versus the euro plumbed overnight and was just off a 15-year low against a basket of currencies.
Expectations of an interest rate cut of as much as 50 basis points by the Federal Reserve at the Sept. 18 meeting weighed on the dollar.
“The real problem is the US economy,” said Luke Waddington, head of forex trading at Royal Bank of Scotland in Tokyo.
“Overall there’s some excitement in the price in terms of dollar weakness.”
The euro bought $1.3890 near the record high just above $1.39, and fetched nearly 159 yen the most in two weeks.
JPMorgan Chase currency strategists said the euro may struggle to extend gains if the Fed cuts rates by just 25 basis points and if oil prices fall back from record peaks, but “very short-term momentum could easily rule the day”.
Tokyo traders also said that currencies that have performed well against the dollar may be vulnerable to profit taking ahead of an upcoming three-day weekend in Tokyo, as well as the Fed meeting and refinancing of a huge wave of maturing commercial paper borrowings this month.
The dollar’s trade-weighted index against six major currencies stood at 79.441, near a fresh 15-year low of 79.319 reached on Wednesday. Against the yen, the dollar was at a touch firmer at 114.30 yen
Spot gold slipped to $709.90 per ounce, but hovered within easy reach of its 16-month high of $714.20 set on Tuesday, while Japanese government bonds were softer with the yield on the 10-year bond up 1.5 basis points at 1.520 %. REUTERS