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Asian markets lifted by US stocks’ move to record territory

Thursday 02.50 BST

Overview

Asian stocks were higher, basking in the glow of a record high for the S&P 500, even as minutes from the Federal Reserve’s most recent meeting showed it would probably raise interest rates as early as next month.

Hot topic

The S&P 500 closed 0.25 per cent higher at a record 2,404.4 on Wednesday. Only last week, the Wall Street benchmark suffered its biggest one-day fall since September and endured some turbulent trading as political turmoil in Washington cast doubts on President Donald Trump’s ability to push through his pro-business legislative agenda.

Concerns have eased this week, though, and investors also managed on Wednesday to look past the prospect of monetary policy being tightened in coming months. The minutes from the Fed’s May meeting showed most of the participants felt it would “soon be appropriate” to increase the Federal funds rate again, provided the economy remained on track. The probability of the central bank lifting the rate to a range of 1-1.25 per cent next month is 95 per cent, compared to 82.5 per cent last week, according to Bloomberg data.

The prospect of higher interest rates, however, did not help the dollar index. The measure of the US currency against a basket of peers was down 0.2 per cent at 97.044 in Asia and is hovering close to Monday’s six-month low.

Equities

Japan’s Topix was up 0.3 per cent in morning trade. Australia’s S&P/ASX 200 gained 0.3 per cent. Ansell was among the top performers on the Australian bourse, up 3.9 per cent, after the glove maker sold its condom business to Chinese group Humanwell Healthcare for $600m.

Chinese stocks steadied after Moody’s cut the country’s credit rating by one notch yesterday to A1. The Shanghai Composite gained 0.1 per cent in morning trade, and had closed 0.1 per cent up yesterday after recouping intraday losses of as much as 1.3 per cent. The tech-heavy Shenzhen Composite was down 0.2 per cent on Thursday.

Hong Kong’s Hang Seng was up 0.8 per cent. Cathay Pacific was down 2 per cent and the worst performer in the index, pulling back after a 6.1 per cent gain Wednesday, following a Goldman Sachs upgrade of the stock.

Forex

South Korea’s won was the best-performing major currency, up 0.7 per cent against the dollar, after the Bank of Korea kept interest rates on hold, as expected, at a record low 1.25 per cent. The central bank last cut rates a year ago.

The Japanese yen was 0.1 per cent weaker at ‎¥111.65 per dollar.

The euro continued its march higher, up 0.1 per cent to $1.1227 and was hovering around an eight-month high.

Commodities

Oil prices were firmer ahead of today’s Opec meeting in Vienna where major producers are expected to agree to extend production cuts beyond March next year. Brent crude, the international benchmark, was 1 per cent higher at $54.52 a barrel, rebounding Wednesday from its first decline in six sessions. West Texas Intermediate was up 1 per cent at $51.87.

Gold was down 0.1 per cent at $1,257.47 an ounce. Iron ore futures were 1.2 per cent lower in China, extending declines over the past three sessions to 6.7 per cent.

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