Hong Kong: Asian shares edged higher on Wednesday looking past a surprise fall in US consumer confidence and the Australian dollar jumped to a 13-month high after August retail sales data beat forecasts.
European stock futures pointed to a slight rise in opening trade on the last day of a quarter seen registering the strongest gain in nearly a decade, while US equity futures were up about 0.2%.
China’s main stock market jumped a percent boosted by the acquisition plans of Industrial and Commercial Bank of China (ICBC), the world’s biggest bank by market value, while the Korean won rose to a near one-year high.
“GDP and earnings are still being upgraded, valuations are not horribly expensive and cash is still zero percent, we are in a sweet spot,” said Khiem Do, head of the Asia multi-asset group at Baring Asset Management.
He expects the stock rally to sustain and corrections to remain mild for the rest of the year.
Referring to US consumer confidence he said: “It is a volatile data, next month it may be up again and it is very difficult to predict. Its not as if its been falling for months in a row.”
The Aussie dollar, which has been on the uptrend after recent market talk about an imminent rate hike lifted its yield allure, received a further boost as data showed consumers continue spending even as the stimulus programme nears its end.
The data took the currency to a peak of $0.8820 and pushed interest rate swaps to a three-week high as markets priced in a greater chance of a rate increase in November, with increased chances of hike in December as well.
The Shanghai Composite Index rose as much as 1.8% after ICBC said it was bidding to buy Thailand’s ACL Bank for up to $545 million to tap rapid growth in the Thai economy and in trade..
Yet, the benchmark stock index has lost around 7% so far this quarter and is heading for its worst quarterly performance this year, mainly reflecting worries about an oversupply of shares.
South Korea’s won currency rose as high as 1,177.5 to a dollar, a one-year high, forcing foreign exchange authorities to buy the greenback to curb the won’s strength.
Taiwan, which competes with South Korea in exports of a number of goods, including electronics, also saw its currency rise, with exporter deals and foreign fund inflows boosting the Taiwan dollar to a near one-year high. The currency rose to as high as T$32.157 to the US dollar.
Broadly, Asian stock markets were higher as investors ignored an unexpected fall in US consumer confidence in September, which brought down shares at Wall Street.
The MSCI index of Asia Pacific stocks traded outside Japan was up about 0.4% and is set to post a second straight quarterly gain.
The regional gauge is up 21% this quarter, adding to the second quarter’s 32% gains. Prior to that it had posted six successive quarters of losses.
The Thomson Reuters index for stocks in Asia-Pacific ex-Japan was down about half a percent.
Japan’s Nikkei average edged up 0.3% in cautious trade, with investors hesitant to actively take positions ahead of a series of economic data releases and at the end of Japan’s fiscal half-year.
Meanwhile, the US dollar fell against the yen towards an eight-month low marked earlier this week as Japanese exporters sold the dollar to settle business before the quarter ends.
Earlier, the dollar had risen on short-covering and as Japanese importers bought dollars. But it soon erased gains as such corporate demand faded.
The dollar slipped 0.4 percent from late US trade to 89.65 yen, erasing earlier gains to ¥90.42 on trading platform EBS and falling towards an eight-month trough near ¥88.20 hit on Monday.
“The market is dominated by quarter-end flows from companies and position-squaring by investors, temporarily lacking a clear sense of direction,” said Tsutomu Soma, senior manager of foreign securities at Okasan Securities.
But to others the dollar’s reversal was not surprising and the broad downtrend for the US currency is still down.
“The US dollar will remain under pressure to depreciate while currencies in Asia will tend to rise given improving growth prospects in the region,” said Stephen Roberts, an economist at Nomura in Sydney.