Asia Markets

Asian stocks close higher with central banks in spotlight; Kospi hits over 2,400

Key Points
  • Investors digested comments from the Bank of England and Bank of Canada overnight.
  • ECB President Mario Draghi's comments had been misinterpreted, sources said. Despite that, the euro traded higher for a third straight session.
  • South Korea's benchmark Kospi index crossed the 2,400 level briefly on Thursday after opening at a record level.

Asian bourses closed higher on Thursday, taking cues from a stronger finish in U.S. markets, as traders digested comments from top central bankers overnight.

Japan's Nikkei 225 rose 0.45 percent or 89.89 points to close at 20,220.3. South Korea's benchmark Kospi index traded higher by 0.55 percent or 13.1 points to close at 2,395.66. The Kospi opened at a record high and briefly crossed the 2,400 level earlier in the session.

Over in Australia, the S&P/ASX 200 closed higher by 1.08 percent or 62.402 points at 5,818.1, led by gains in the energy, materials and information technology sub-indexes.

Markets in greater China were also in the green. Hong Kong's closed up by 1.1 percent or 281.92 points at 25,965.42. On the mainland, the edged higher by 0.46 percent or 14.6973 points to finish at 3,187.8987 and the Shenzhen Composite advanced 0.472 percent or 8.8979 points to close at 1,892.2692.

Indonesian markets remain closed today.

Comments from European Central Bank President Mario Draghi on Tuesday about adjustment in the central bank's monetary stimulus had been misinterpreted, according to reports. Draghi had wanted to signal tolerance for weaker inflation and not tightening in policy, sources told Reuters.

Despite those comments, the euro climbed for a third straight session to trade at $1.1423 at 4:40 p.m. HK/SIN. The euro traded as high as $1.1434 in the session to hit a fourteen-month high.

The Bank of England was also in the spotlight, after BoE Governor Mark Carney's comments about debating an increase in interest rates "in the coming months." Carney had sounded more dovish in a speech earlier this month.

While central bankers do change their minds, Carney did so "without warning and fresh economic data," Brown Brothers Harriman Global Head of Currency Strategy Marc Chandler said in a Wednesday evening note.

Cable gained further to trade at $1.2979 at 4:41 p.m. HK/SIN after hitting a three-week high overnight.

Meanwhile, Bank of Canada Governor Stephen Poloz told CNBC that interest rate cuts "have done their job." The rose to its highest level since February following the news. The loonie traded at $1.3031 to the dollar at 4:42 p.m. HK/SIN compared to levels around the $1.32 handle seen earlier this week.

Why Western Digital is being 'unwise'
Why Western Digital is being 'unwise'

In company news, Toshiba postponed plans for the sale of its memory business following its decision to take legal action against Western Digital for interfering in the deal.

Toshiba selected a Japan-led consortium as its preferred bidder earlier this month. Western Digital had sought an injunction to prevent the sale from taking place. Toshiba shares closed 3.69 percent lower.

Shares of J.Front Retailing, a holding company in Japan in the department store space, closed 8.65 percent higher following the release of robust net profits for its first quarter.

Nomura research analyst Masafumi Shoda maintained a "Buy" call on the company. Shoda added that earnings in the first half will exceed guidance due to expenses being kept under budget and the reactive increase in department store sales.

Oil prices gained for the sixth straight session. Brent crude futures rose 0.7 percent to trade at $47.64 a barrel and U.S. West Texas Intermediate added 0.78 percent to trade at $45.09.

In currencies, the dollar edged lower to trade at 95.768 against a basket of rival currencies at 4:44 p.m. HK/SIN. Against the yen, the dollar rose to trade at 112.56. The greenback had traded at a more than one-month high against the yen earlier in the week.

Earlier in the session, the yuan traded at its highest level since November last year. The reference point for the yuan had been set at 6.794 per dollar, Reuters said. The People's Bank of China lets the yuan spot rate rise or fall a maximum of 2 percent against the greenback, relative to the official fixing rate.

The on-shore yuan traded at 6.7795 to the dollar at 4:50 p.m. HK/SIN, compared to levels around the 6.8 handle seen for the past two weeks. The offshore yuan traded at 6.7872 to the dollar.

Will health-care stocks stage a comeback?
Will health-care stocks stage a comeback?

Stateside, stocks closed higher, with financial stocks rising before the release of the Federal Reserve's stress test results. Bank stocks rose further in extended trading after results showed the Fed had approved the capital return plans of all 34 banks.

On the economic calendar for Thursday, Japan retail sales for the month of May rose 2 percent on year, lower than the 2.6 percent expected, Reuters reported.