Asian markets gain after Yellen comments, positive China trade data; Kospi hits record high

  • South Korea's benchmark Kospi index hit a record high, making gains after the Bank of Korea kept policy rates steady
  • China trade data for the month of June topped analyst expectations, Reuters said
  • Federal Reserve Chair Janet Yellen's testimony Wednesday was regarded by markets as dovish; the dollar continued its slide against several currencies

Most Asia markets advanced in Thursday trade as markets parsed through Federal Reserve Chair Janet Yellen's comments, with several indexes hitting record highs in the session.

The Nikkei 225 closed just above the flat line, up 0.01 percent or 1.43 points, at 20,099.81. Australia's S&P/ASX 200 surged 1.11 percent, or 62.969 points, at 5,736.8, led by gains in the health care sub-index.

The South Korean benchmark Kospi index advanced 0.74 percent, or 17.72 points, to end at 2,409.49 after the Bank of Korea announced it was keeping base rates steady at 1.25 percent. The Kospi hit a record high when it touched 2,422.26 earlier in the session.

Hong Kong's Hang Seng Index jumped 1.04 percent to hold near two-year highs at 3:15 p.m. HK/SIN.

Mainland China markets were mixed following the release of trade data. The Shanghai Composite closed up 0.67 percent, or 21.4934 points, at 3,219.0373. The Shenzhen Composite firmed after the news but edged down 0.04 percent, or 0.7497 points, to end at 1,888.6975.

Positive sentiment in Asia flowed over to India markets too, with the benchmark S&P BSE Sensex index touching the 32,000 level for the first time in early trade. The BSE stood at 32,023.43 at 3:16 p.m. HK/SIN.

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First half China exports in yuan terms rose 15 percent on year, according to Reuters. Imports for the same period were up 25.7 percent, Reuters reported. Data from Chinese customs also reflected the country's trade with North Korea grew 10.5 percent in the first half.

Meanwhile, China June trade data came in above expectations. June exports in dollar terms rose 11.3 percent on year while imports rose 17.2 percent. A Reuters poll had forecast a rise of 8.7 percent rise in exports and a 13.1 percent increase in imports.

The Australian dollar — which is sensitive to China economic data — was stronger following the headlines. The Aussie dollar traded at $0.7710 at 3:07 p.m. HK/SIN compared to the $0.7680 seen before the news. The Aussie dollar had strengthened overnight on the back of the softer dollar.

In the U.S., Yellen said Wednesday the central bank would proceed with the unwind of its balance sheet this year, but that it was paying close attention to inflation data. Yellen's comments about how it was "premature" to determine if the U.S. economy was on track for 2 percent inflation was interpreted by market watchers as dovish.

Yields of the benchmark 10-year U.S. Treasury fell from around 2.35 percent to 2.31 percent during Yellen's testimony.

Meanwhile, the dollar index traded at 95.539 at 3:04 p.m. HK/SIN, off a low of 95.511 hit overnight — its lowest level since June 30.

The greenback was mostly flat at 113.15 yen after sliding against the yen overnight. The dollar fetched as little as 113.12 yen overnight compared to levels around 113.95 seen in the prior session.

"Investors have been skeptical of the Fed's hawkishness in the days leading up to Janet Yellen's testimony and when she failed to sufficiently emphasize the improvements in the economy, the dollar U-turned as the bulls abandoned their trades quickly," BK Asset Management Managing Director of FX Strategy Kathy Lien said in a note.

Wall Street cheered Yellen's comments on future rate hikes as major indexes closed higher, with the Dow closing up 0.57 percent, or 123.07, at a record 21,532.14.

In currencies, the Canadian dollar gained further to trade at C$1.2736 to the dollar after rising to its highest levels in more than a year. This followed the Bank of Canada raising interest rates by a quarter of a percentage point on Wednesday. The greenback fetched as little as 1.2740 Canadian dollars overnight compared to the 1.2920 Canadian dollars seen in the prior session.

In individual stocks, South Korean chip maker SK Hynix said it wanted an equity stake in the NAND chip unit of Japanese conglomerate Toshiba, Reuters said. SK Hynix is part of a consortium that Toshiba had chosen as the preferred bidder for the sale of its chip arm. Talks between Toshiba and its preferred bidder have stalled, Reuters added.

Toshiba shares closed down 4.45 percent while SK Hynix finished higher by 2.47 percent.

Also in the news, Fitch Ratings downgraded Sunac to "BB-" from "BB" on Wednesday following news that the company was acquiring assets from Dalian Wanda. Fitch also placed Sunac on "Watch Negative," the ratings agency said in a statement.

Oil prices struggled during Asian trade. Brent crude slid 0.23 percent to trade at $47.63 a barrel and U.S. crude declined 0.22 percent to trade at $45.39.

Meanwhile, Malaysia's central bank held benchmark rates steady at 3 percent, as was widely expected by markets.