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Asia markets mostly higher as investors weigh China data, possible Fed hike; Thai shares surge

Markets in Asia finished mostly higher on the final trading day of the week, reversing some early losses, as investors weighed price increases in China and the possibility of a U.S. interest rate hike later in the year.

The SET index in Thailand advanced 4.18 percent as of 3:06 p.m. HK/SIN, despite Thursday's news of the passing of the country's 88-year-old King Bhumibol Adulyadej, who had guided the country through decades of change. The Thai baht traded higher against the dollar at 35.23, compared with its last close at 35.40.

In Japan, the Nikkei 225 closed up 82.13 points, or 0.49 percent, at 16,856.37, while the Topix index gained 4.88 points, or 0.36 percent, at 1,347.19.

Shares received a boost from a relatively weaker Japanese yen, which was trading at 104.17 against the dollar as of 3:08 p.m. HK/SIN, up from levels below 103.20 earlier in the week.

Japanese export stocks closed mostly higher, with Toyota up 0.40 percent, Nissan gaining 0.81 percent and Honda higher by 0.69 percent. A weaker yen tends to boost exporters as it increases the value of their overseas earnings when they are repatriated.

Across the Korean Strait, the Kospi gained 7.22 points, or 0.36 percent, to 2,022.66. Hong Kong's Hang Seng index added 0.98 percent by late-afternoon trade, while Chinese mainland markets reversed some of their earlier losses to close mixed. The benchmark Shanghai composite finished up 2.38 points, or 0.08 percent, at 3,063.73, while the Shenzhen composite fell 2.56 points, or 0.12 percent, to 2,046.74.

Australian shares moved little, with the benchmark ASX 200 index closing nearly flat at 5,434.00. Among key sectors, materials closed down 0.46 percent, the heavily-weighted financials sector finished lower by 0.26 percent and the energy sub-index finished flat.

Major mining shares Down Under traded down, with Rio Tinto closing down 1.01 percent, Fortescue lower by 0.41 percent and BHP Billiton losing 0.92 percent.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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The trading session in Asia followed dampened global sentiment on Thursday following weaker-than-expected Chinese trade data.

"The global theme was marked by a lack of coherent story except for perhaps modest dollar relapse that gave back part of recent gains," said Vishnu Varathan, senior economist at Mizuho Bank, in a morning note. "To be sure, this is a long way off any meaningful reversal."

The dollar index, which measures the greenback against a basket of currencies, has been on a steady incline this week, rising from levels below 96.00 to over 98.00 before stumbling briefly on Thursday and falling as low as 97.499. On Friday, as of 3:13 p.m. HK/SIN, the dollar index traded at 97.773.

The dollar likely received a boost from the Wednesday release of the Fed meeting minutes, where officials who favored hiking interest rates worried that waiting too long could send the United States into a recession.

"Fed hike expectations receded after China's weak trade data spooked equities worldwide," said analysts at Singapore's DBS Bank. "Close attention will be paid to Fed Chair Janet Yellen's speech tonight at the Boston Fed Conference on how close the Fed is towards a second rate hike in December."

Yellen was due to speak at 1:30 p.m. EDT on Friday.

Dollar strength pushed other currency majors lower; the British pound fell as low as $1.2183 during Asian hours, while the Euro traded at $1.1014 as of 3:15 p.m. HK/SIN. The Australian dollar climbed against the greenback, up at $0.7597, likely receiving a boost from higher oil prices as well as rising inflation in China.

The consumer price index (CPI) in China rose 1.9 percent on-year in September, while producer prices rose 0.1 percent-on year, the first increase since 2012. Prices beat the forecast made by economists in a Reuters poll and signaled surprising economic strength in the world's second largest economy.

ANZ analysts David Qu and Raymond Yeung said in a note they expected on-year producer prices to continue improving on the back of recovering commodity prices and a low base.

"However, the overcapacity in the economy should limit the upward pressure of inflation ... [and] the sluggish aggregate demands should also weigh on the overall price level," Qu and Yeung said.

The on-shore Chinese yuan traded at 6.7247 against the dollar, after earlier strengthening to a session high of 6.7205 following the release of the data.


Hiroshi Watanabe | Getty Images

In company news, shares of Nikkei heavyweights Fast Retailing climbed 4.98 percent after the company, which owns clothing brand Uniqlo, said on Thursday it expected its fiscal 2017 operating profit to jump 37.5 percent to 175 billion yen ($1.68 billion).

Softbank Group shares advanced 3.29 percent, following reports the company was working with Saudi Arabia's sovereign wealth fund to launch a new London-based tech fund that will manage as much as $100 billion.

South Korean electronics giant Samsung gained 1.28 percent to 1,577,000 Korean won a share, despite announcing Friday morning before market open that it was going to take a 3.5 trillion won ($3.1 billion) hit to its operating profit over the next two quarters from the fallout of its bungled Galaxy Note 7 recall.

However, analysts have said Samsung's strong balance sheet and substantial liquidity were expected to absorb the financial impact, which could be why investors shrugged off the news.

In other news, Reuters reported, citing sources, that Chinese state-owned chemical companies, Sinochem Group and ChemChina were in talks about a possible merger to create a chemicals, fertilizer and oil giant with almost $100 billion in annual revenue.

Sinochem shares closed up 9.99 percent and ChemChina added 4.03 percent.

Oil prices advanced during U.S. hours on Thursday, following data stateside that showed drawdowns in diesel and gasoline, while crude inventories showed a build up.

The U.S. Energy Information Administration (EIA) data showed crude stocks increased 4.9 million barrels in the week ended on October 7, well above analysts' forecast of a 700,000-barrel rise, according to a Reuters report.

However the EIA data showed distillates, which include diesel and heating oil, fell 3.7 million barrels and gasoline declined 1.9 million barrels, Reuters wrote.

During Asian hours, prices advanced further; U.S. crude futures traded up 0.75 percent at $50.82 a barrel, after gaining 0.5 percent during U.S. hours. Global benchmark Brent was up 0.33 percent at $52.19, following a 0.4 percent gain overnight.

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