Asian stocks outside China advanced on Thursday, as investors eyed gains in oil prices and the positive lead from Wall Street. However, trade volumes stayed light as investors await the Federal Reserve's policy decision.
The Fed's Federal Open Market Committee (FOMC) will decide whether to raise short-term interest rates for the first time in nine years at its two-day meeting, which began Wednesday. All eyes are on expected statement and press conference due on Thursday afternoon local time.
Goldman Sachs is calling for the Fed to stand pat on interest rates this week amid factors such as the recent downturn in global equities.
"Our take is they are not [going to hike]," Sheila Patel, CEO, International of Goldman Sachs Asset Management, told CNBC. "If you look at the situation around the world today, [the Fed] is in a much different position... we see credit spreads widening, a much stronger U.S. dollar and equities coming down. The only reason for a move is the sentiment to just get it over with and that's not the way for the Fed to make a decision."
Energy counters led the rise on major U.S. indexes overnight, after global crude oil prices surged 5.7 percent overnight. The finished 0.8 percent higher, with Chevron leading the index higher. The S&P 500 rose 0.9 percent to break resistance at 1,993, ending within 5 points of the psychologically key 2,000 level. The tech-heavy Nasdaq Composite ended up 0.6 percent.
Mainland indices lower
China's share markets saw a rise in volatility in the afternoon trading session, with the Shanghai Composite index closing down 2.1 percent after moving up as high as 1.6 percent. Most of the losses came about in the final 30 minutes of trading before the market close at 3pm local time, replicating the swift jolt in market activity late Wednesday.
The benchmark CSI300 Index also erased early advances to fall 2.2 percent, while the smaller Shenzhen Composite ended 1.5 percent lower.
Investors may be eyeing new developments in Beijing's stock market probe; Zhang Yujun, the assistant chairman of the China Securities Regulatory Commission (CSRC), is under investigation for "severe violation of discipline," according to a statement by the country's anti-graft watchdog Central Commission for Discipline Inspection late Wednesday. Zhang is set to be replaced by Li Chao, the former secretary of the People's Bank of China's (PBOC) chief Zhou Xiaochuan.
"This is quite significant as it should ease conflicts between the CSRC and PBOC, and hopefully see them working well together in the reform of China's securities sector. It is also further evidence of the rise of the PBOC towards an international-standard central bank during Xi Jinping's reign, a world away from its position as an unimportant backwater in the Communist hierarchy at the beginning of the Reform period," IG's chief market strategist Chris Weston wrote in a note.
All main sectors tumbled on Thursday. Citic Securities plunged 4.2 percent in Shanghai following news from Tuesday that the brokerage's president and two other executives are being probed for suspected insider trading and leaking information. However its Hong Kong-listed shares bumped up 2 percent, outperforming the Hang Seng index which nursed modest losses.
Nikkei jumps 1.4%
The inspiring handover from Wall Street helped Japan's Nikkei 225 index to chalk up a three-day winning streak, brushing off disappointing trade data released before the market open.
Japan's exports rose 3.1 percent in August from a year earlier, down from 7.6 percent in the preceding month and missing expectations for a 4.0 percent annual increase, underscoring concerns about the fragile recovery in the world's third-biggest economy. Imports fell 3.1 percent on-year, wider than the estimate for a 2.2 percent decrease.
This translates into a monthly deficit of 569.7 billion yen a year earlier, versus Reuters' forecast for a trade deficit of 541.3 billion.
Investors also seem to be ignoring news that ratings agency Standard & Poor's downgraded its credit rating for Japan from AA- to A+ on Wednesday.
Securities and steel producers were also among the day's top performers; Nisshin Steel and Nippon Steel and Sumitomo Metal closed up 4.7 and 3.1 percent respectively, while Nomura Holdings gained 3.7 percent.
ASX rises 0.9%
Australia's S&P ASX 200 index extended gains amid a broad-based rally.
The key resources sector took the cues from Wall Street; oil-related plays such as Santos, Woodside Petroleum and Oil Search climbed between 2 and 3.6 percent. Market bellwether BHP Billiton bounced up 2.8 percent, tracking the jump in its U.S. ADRs overnight.
Financials also gained ground, with all four major lenders rising between 0.3 and 1.4 percent.
New Zealand shares edged up 0.5 percent, while the New Zealand dollar recovered slightly from the impact of below-view growth figures to trade at 0.6358 versus the U.S. dollar in late Asian trade.
The country's second quarter gross domestic product (GDP) grew 0.2 percent from the previous three months, unchanged from the first quarter but missing market consensus for a 0.5 percent gain. On a year-on-year basis, the economy expanded 2.4 percent in the April-June period, just shy of the 2.5 percent forecast by Reuters and down slightly from 2.6 percent in the first three months of 2015.
South Korea's Kospi index lagged behind regional peers to finish little changed.
Energy plays such as LG Chem and SK Innovation got a lift from firmer oil prices overnight, up more than 2 percent each. In the tech sector, SK Hynix and Naver closed up 3 and 5.9 percent respectively.
The bourse's top two weighted stocks Samsung Electronics and Hyundai Motor inched up modestly after flip-flopping near the flatline all day long. However, shares of utility Kepco and steelmaker Posco sagged 2.2 and 1.1 percent respectively.
In other news, Bank of Korea (BOK) chief said on Thursday that he expects the Fed to begin raising interest rates this year and raise them in the future at a more gradual pace than in the past.
JKSE gains 1%
The benchmark Jakarta Composite advanced ahead to close 1.06 percent higher. Indonesia's central bank kept its benchmark policy rate unchanged at 7.50 percent.
On the other hand, the Indonesian rupiah hit a fresh 17-year low of 14,450 against the greenback.
"Given the message that BI cannot run countercyclical monetary policy because more capital outflows would increase government and corporate yields and weaken currency, which is a double whammy for the public finances and some Indonesian corporates, it would be wise for BI to keep the rate unchanged at 7.5 percent," an e-mail note from Natixis said on Thursday.