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Asian markets close higher as dollar edges above 10-month lows; Aussie banks climb

  • Asian markets closed higher, buoyed by positive sentiment over Chinese economic data released Monday
  • The dollar nursed losses after touching 10-month lows overnight on headwinds facing U.S. health-care reforms
  • Most Australian banks traded higher after regulator said the capital requirement for the four biggest banks in the country would be raised by 2020

Asia markets closed in the green as the dollar nursed losses after hitting 10-month lows overnight on dimmed prospects for U.S. health care reforms.

The Nikkei 225 rose 0.1 percent, or 20.95 points, to close at 20,020.86, while South Korea's benchmark Kospi index reversed earlier losses to close up 0.16 percent, or 3.9 points, at 2,429.94.

The S&P/ASX 200 gained 0.79 percent, or 44.707 points, to close at 5,732.1, driven by strength in the heavily-weighted financials sub-index, which was up 2.44 percent.

Markets in greater China were also in the money. The Hang Seng Index traded higher by 0.53 percent at 3:12 p.m. HK/SIN, gaining for a fourth consecutive session.

The Shanghai Composite surged 1.42 percent, or 45.2995 points, to end at 3,232.8667, and the Shenzhen Composite rose 1.531 percent, or 27.7306 points, to finish the session at 1,839.0569.

The CSI300 index, China's blue-chip index, closed up 1.73 percent, or 63.5331 points, at 3,730.7138 — its highest levels since December 2015.

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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Drivers of the favorable market sentiment during the Asian trading session included the positive U.S. earnings season — of the S&P 500 companies that have reported, around 80 have beat on the bottom line — and better-than-expected Chinese economic data released Monday, CMC Markets analyst Margaret Yang said.

With the Hang Seng Index and Straits Times Index having broken through resistance levels, markets in the region could be set for the beginning of a new rally, Yang added.

In the U.S., President Donald Trump said he preferred to "let Obamacare fail" as the Republican Party's attempt to just repeal the law appeared to stall Tuesday. The GOP's health-care replacement plans had collapsed on Monday when too many senators said they would oppose the party's current version of reform.

The inability to enact health-care reforms in the U.S. led to questions about Trump's ability to enact changes to the American tax regime in the near future. Still, some analysts continued to voice optimism about some form of tax reform seeing passage.

"The failure in the Senate to modify Obamacare followed immediately by a failure to cancel it outright are but the latest miscues suggesting a four-year lame duck presidency," DBS said in a note on Wednesday. "Reform, deregulation and fiscal stimulus that excited markets seven months ago are becoming evermore distant memories and expectations for GDP growth and Fed action are falling accordingly."

The dollar edged up after touching a 10-month low overnight. The dollar index, which measures the dollar against a basket of currencies, stood at 94.793 at 3:12 p.m. HK/SIN.

Against the yen, the greenback fetched 112.08 yen, after trading as low as 111.85 earlier in the session. The euro was at its strongest against the dollar since May 2016, hitting a high of $1.1557 overnight. The common currency last traded at $1.1533.

The 10-year U.S. Treasury yield fell to more than two-week lows overnight, touching 2.26 percent. In Asia trade on Wednesday, it was at 2.2749 percent.

The yield on the 30-year Treasury bond sank to 2.85 percent overnight, compared with around 2.9 percent earlier in the week.

In other currencies, the Australian dollar touched a two-year high, trading at $0.7926 at 3:13 p.m. HK/SIN following what markets perceived as a hawkish slant in the central bank's minutes released Tuesday and the dollar's weakness.

Oil prices trended lower. Brent crude futures declined 0.16 percent to trade at $48.76 a barrel and U.S. West Texas Intermediate crude edged down 0.13 percent to trade at $46.34.

In individual stocks, Australian banks traded mostly higher after regulators said the capital requirement for the country's four biggest banks would be increased by 2020. At the end of the trading session, ANZ was up 3.92 percent, Westpac rose 3.8 percent and National Australia Bank gained 3.06 percent.

"The shares are up due to a relief rally given the announcement was not as negative as it could have potentially been," Regal Funds Management portfolio manager Omkar Joshi told CNBC.

"While the capital requirements are increasing, the banks are fairly well-placed to get to (the) Australian Prudential Regulatory Authority's minimum requirements organically over the next few years," Joshi added.

Shares of Rio Tinto were also in focus. Analysts said Rio Tinto's 2017 dividend could be the highest in the company's history due to higher iron ore prices, the Australian Financial Review reported. The diversified miner lowered its guidance for iron ore exports on Tuesday. Shares of the company were down 0.68 percent.

In Japan, petroleum company Idemitsu Kosan said it would issue 48 million shares after a court turned down the company founders' attempt to prevent the offering. The Idemitsu family, who founded the company, are at odds with management's plans to acquire Showa Shell Sekiyu. The sale of new shares would dilute the family's stake in the company and reduce their ability to veto, Reuters said. Shares of the company closed up 1.97 percent.

Shares of Singapore telco M1 tumbled 7.62 percent after Axiata Group said Tuesday that it was aborting a strategic review of its shareholding in the company. The drop in share price also followed news the company experienced a 20.8 percent fall in second-quarter earnings, local media reported.

Meanwhile, NetLink NBN Trust, Singapore's largest IPO in six years, began trading at 3:00 p.m. HK/SIN at 0.815 Singapore dollars ($0.62) each, Reuters reported, slightly above the company's offer price of 0.81 Singapore dollars ($0.59).

In economic news, the Bank of Japan began a two-day policy meeting Wednesday.

Stateside, stocks closed mostly higher in the last session as earnings season continued.

Ahead, U.S. housing starts and oil stocks data from the Energy Information Administration were due during U.S. hours.