Singapore / Hongkong: Gold hit a fresh record high near $1,150 an ounce on Wednesday, boosting precious metals across the board, as a slight fall the dollar index added to momentum buying.
Asian stocks edged up as hunger for risk stayed high as the year end approached.
The exception: A masked woman walks in front of an electronic stock board of a securities firm in Tokyo, Japan, on Wednesday. Japan’s benchmark Nikkei lost 53.13 points to wrap up the day at 9676.80. Itsuo Inouye / AP
Gold has risen about 30% so far this year, fuelled by dollar weakness and investors’ search for assets which could be used to hedge against inflation.
Expectations that US interest rates will stay at exceptionally low levels for some time have dragged the dollar and encouraged global investors to look for better returns from riskier trades, such as emerging markets, currencies, commodities and stocks.
“It’s going to be hard for the dollar to gain further, since it looks like that the US will keep its low interest rate policy for a while,” said Tomohiro Nishida, treasury department manager at Chuo Mitsui Trust and Banking Co. in Tokyo.
The dollar index, which tracks the US currency against six other major currencies, fell some 0.3%, not far from a 15-month low struck on Monday. The MSCI index of Asia Pacific stocks outside Japan rose about 0.4%, after touching the highest since 31 July 2008 on Tuesday.
South Korea’s Kospi rose 1.1% to its highest close in three weeks, led by shares of Hyundai Mobis Co. after the company’s affiliate Hyundai Motor said it had to dispose of a stake in the car parts maker to meet anti-trust laws.
However, Japan’s Nikkei average bucked the regional trend, shedding 0.6% to end at a six-week closing low on fears that banks and property firms would dive in to tap equity markets for fresh capital in coming days.
Shares of Japan Airlines Corp., or JAL, tumbled nearly 4% to their lowest level since the firm’s 2002 re-listing after the nation’s transport minister declined to rule out a court-led bankruptcy for the troubled airline.
After the close, Mitsubishi UFJ Financial Group posted a 59% rise in quarterly profit helped by stronger lending and said it will raise up to $11.2 billion by issuing new shares, as Japan’s biggest bank aims to meet tougher global capital requirements.
The 1-trillion-yen share issue is a record for a Japanese financial firm and biggest fund-raising there in nearly a decade.
“Investor sentiment is pretty bad right now, it seems there is no end to negative factors,” said Noritsugu Hirakawa, a strategist at Okasan Securities.
“We have the strong yen, fund-raising worries, political uncertainty, concern about banks, and JAL.”
The Shanghai Composite rose 0.6% to a three-month closing high as investors bought energy stocks on optimism over rising demand for power to fuel China’s economic recovery.
“An increasing number of investors are now pouring money into the market, expecting it to sustain a medium-term rally due to China’s improving economy and corporate earnings,” said Zhang Qi, senior analyst at Haitong Securities in Shanghai.
In Hong Kong, stocks weakened 0.3% after hitting the 23,000 level for a second consecutive session earlier in the day, as investors took profits on HSBC shares and other lenders. “There is a bit of taking money off the table as the year-end approaches,” said Howard Gorges, vice-chairman at South China Financial Holdings. “The selling pressure is heavy.”
Shares in Taiwan and Australia rose slightly, while Singapore and India fell less than 1%.
Oil rose towards $80 per barrel after an industry report showed US crude oil stocks fell steeply last week, but gains were limited by doubts over the outlook for economic growth and energy demand.
“Commodities, including oil, have seemed to defy gravity over the last few weeks, partly supported by the dollar, but also on a false assumption that economic recovery will lead to a further rise in prices,” said Eugen Weinberg, head of commodity research at Commerzbank.
“That is probably wrong because the economic recovery is already reflected adequately in the current prices,” he said.
Kaori Kaneko and Elaine Lies in Tokyo contributed to this story.