Asia Markets

Asia markets gain as investors await Fed policy cues later this week

Key Points
  • The Federal Open Market Committee will meet Sept. 19 to 20
  • The pound was mostly flat after spiking on Friday following a policymaker's comments about a potential increase in interest rates
  • China's house price index showed that gains slowed in August
  • Japan markets were closed for a holiday

Asian shares closed higher on Monday as investors anticipated clues on the direction of monetary policy from central banks later in the week.

South Korea's benchmark Kospi index soared 1.35 percent to close at 2,418.21, with technology stocks driving broader gains on the index: Samsung Electronics closed up 4.13 percent and SK Hynix rose 3.24 percent. Automakers and manufacturing names finished the session mixed.

Down Under, the S&P/ASX 200 tacked on 0.45 percent to close at 5,720.6. The heavily-weighted financials sub-index was up 0.78 percent while the energy and consumer discretionary sub-indexes made moderate gains.

Greater China markets were also positive. The rose 1.2 percent by 3:05 p.m. HK/SIN. On the mainland, the advanced 0.29 percent to end at 3,363.2192 and the Shenzhen Composite added 0.742 percent to close at 2,002.7414.

The MSCI Asia Pacific ex-Japan index was up 1.08 percent at 3:14 p.m. HK/SIN after touching its highest levels in a decade earlier in the session.

Japan markets were closed for a public holiday.

The Federal Open Market Committee's two-day meeting will begin Sept. 19, with an interest rate decision expected early Thursday local time. Markets do not anticipate an interest rate hike at the central bank's September meeting, but will be looking for more details on plans to unwind its balance sheet.

"[D]raining the economy of cheap money can't be viewed as a positive for markets accustomed to feeding off central bank largess. Why investors are so complacent is a mystery, but perhaps the reality check will set in midweek," said Stephen Innes, APAC head of trading at OANDA, in a note.

Markets also digested soft U.S. economic data released Friday before the Fed's meeting. Retail sales fell 0.2 percent in the month of August compared to the 0.1 percent rise forecast in a Reuters poll. Industrial production fell 0.9 percent compared to one month ago, with part of the fall attributed to disruption from Hurricane Harvey.

The dollar index, which tracks the greenback against a basket of rival currencies, edged down to 91.868 at 3:06 p.m. HK/SIN. The U.S. currency firmed against the yen to trade at 111.32 — above the 110 handle seen for most of last week.

Yields on the benchmark 10-year U.S. Treasury note stood at 2.21 percent after climbing steadily in the past week.

Elsewhere, the pound was mostly flat after getting a boost on Friday following Bank of England policymaker Gertjan Vlieghe's comment that data "increasingly" suggested it would be timely to raise interest rates in the "coming months." Vlieghe's comments echoed the central bank's statement on Thursday that an interest rate hike could be expected "over the coming months."

traded at $1.3582 by 3:06 p.m. HK/SIN after spiking nearly 1.5 percent to trade above the $1.36 handle on Friday.

Meanwhile, investor desire for less risky assets faded relatively quickly following North Korea's missile launch on Friday local time, but developments on the Korean Peninsula are likely to continue attracting attention.

President Donald Trump referred to North Korean leader Kim Jong Un as "Rocket Man" in a tweet on Sunday as other U.S. officials continued to reiterate that "all options" were on the table in dealing with the North. Earlier, Trump had agreed with South Korean President Moon Jae-in about putting more pressure on the North in a phone call, Reuters reported. Trump is expected to address world leaders at the United Nations on Tuesday U.S. time.

"Risks surrounding North Korea have not disappeared, even as markets appear to take the regime's belligerence in stride," cautioned Mizuho Bank strategist Chang Wei Liang in a note.

In corporate news, Ant Financial is taking its third shot at buying U.S. payments company MoneyGram International, according to Bloomberg. Ant Financial's attempt comes after the Trump administration recently blocked a China-backed firm's bid for Lattice Semiconductor.

Over in Australia, ANZ said in a Monday statement that it would not be commenting on "media speculation" about its potential divestment of Wealth Australia. The bank added that the "process is ongoing." ANZ shares closed up 1 percent, with other Australia-listed banks also finishing the session higher: NAB was up 1.1 percent and Westpac advanced 0.73 percent.

On the energy front, oil prices edged higher to trade near the five-month highs seen last week on increasing refinery demand, according to Reuters. Brent crude added 0.27 percent to trade at $55.77 a barrel and U.S. crude tacked on 0.54 percent to trade at $50.16.

In economic news, Singapore non-oil domestic exports rose 17 percent in August compared to a year ago, firmly above the 11.8 percent forecast in a Reuters poll.

Other notable data included the 0.2 percent rise in China average new home prices in August compared to a month ago, according to Reuters. That was a deceleration compared to the 0.4 percent increase seen in July.