Asia Markets

Asian shares rise after Wall Street's record close as investors digest Fed minutes

Key Points
  • Asian shares gained following a record close on Wall Street
  • The Nikkei 225 touched a fresh 21-year high
  • Fed minutes on Wednesday showed one more rate hike in the year was "likely to be warranted"
  • Dollar remained under pressure

Most Asian shares gained on Thursday after Wall Street closed at record levels following the latest minutes from the Federal Reserve. Meanwhile, the dollar remained on the back foot.

Japan's Nikkei 225 rose 0.35 percent, or 73.45 points, to close at 20,954.72 after touching a fresh 21-year peak earlier in the session. Softbank Group contributed to broader gains on the index, with the company's stock surging 3.59 percent.

Across the Korean Strait, the Kospi rose 0.68 percent to end at 2,474.76 despite moderate declines in blue-chip exporters: SK Hynix closed down 0.67 percent and LG Display fell 5.12 percent.

Down Under, the S&P/ASX 200 rose even though major mining stocks fell. Miners lost ground after iron ore prices sank overnight: Fortescue Metals tumbled 1.81 percent and Rio Tinto closed 1.4 percent lower. The benchmark index tacked on 0.39 percent to close at 5,794.5.

Hong Kong's advanced 0.37 percent by 3:15 p.m. HK/SIN. On the mainland, the lost 0.02 percent to finish at 3,387.6463 and the Shenzhen Composite finished lower by 0.154 percent at 2,023.3559.

Minutes from the Federal Reserve's last meeting showed that one more interest rate increase in the U.S. this year was "likely to be warranted" given that the economic outlook remained "unchanged" in the medium term, a summary showed. Policymakers, however, remained concerned about inflation.

Expectations for one additional rate hike by year-end stood at 88 percent as of Thursday, according to the CME Group's FedWatch tool.

On Wall Street, major indexes closed at record levels as investors digested those minutes. The Dow Jones industrial average rose 0.18 percent, or 42.21 points, to end at a record 22,872.89.

The dollar, however, sank to its lowest levels since Sept. 26 as investors took note of Fed members' concern over the inflation outlook stateside. The dollar index, which measures the U.S. currency against a basket of rivals, stood at 92.852 at 3:04 p.m. HK/SIN — off a 10-week high touched last week following the release of September jobs numbers.

Against the yen, the dollar edged down to fetch 112.28 yen.

"In a week when North Korean tensions prevented the dollar from rallying, the lack of unambiguously hawkish Federal Open Market Committee minutes was just the excuse that foreign exchange traders needed to send the dollar lower," Kathy Lien, managing director of FX strategy at BK Asset Management, said in a note.

Weakness in the dollar index was also in part due to the firmer euro, which held onto overnight gains. The common currency had climbed on Wednesday after the Spanish government asked for greater clarity from Catalan authorities over whether or not the region had declared independence. The euro traded at $1.1861 at 3:08 p.m. HK/SIN, which was its highest levels in more than two weeks.

Meanwhile, bank stocks were in focus during Asian trade after the International Monetary Fund on Wednesday identified several banks that could "struggle" with profitability in the years ahead, the Wall Street Journal said. Those names included Sumitomo Mitsui Financial Group, Mizuho Financial Group, Standard Chartered and Mitsubishi UFJ Financial Group.

Japanese financials highlighted by the IMF traded slightly lower on the day: SMFG and Mizuho reversed early gains to close down 0.44 percent and 0.2 percent, respectively. MUFJ was off 1.03 percent by the end of the session. Meanwhile, Hong Kong-listed shares of Standard Chartered declined 0.51 percent by 3:09 p.m. HK/SIN.

Other market movers included shares of Japan's Toshiba, which soared 3.77 percent, outperforming other tech sector stocks. The Tokyo Stock Exchange had cancelled its "security on alert" designation on the company's stock.

Shares of Kobe Steel closed up 0.46 percent following huge sell offs in the previous two sessions after the company admitted to falsifying data to meet customer requirements. The company's president acknowledged that there could be more cases of data fabrication after the steelmaker revealed 70 cases of data fabrication at one of its units on Wednesday, Reuters reported.

Over in South Korea, Lotte Group said other firms had indicated interest in buying its remaining stores in China, Reuters said on Thursday. It intended to complete the sale by year-end, the wire service added. Lotte's China business has struggled in recent years, with the breakdown in ties between Beijing and Seoul over the deployment of an anti-missile system not helping matters.

Meanwhile, trade in shares of China's Great Wall Motor was halted in Hong Kong after media reports said the company was in talks with BMW over a joint venture in China. Shares of the Chinese automaker had jumped 20 percent in the previous session on the news.

On the energy front, oil prices declined after rising for a third consecutive session on Wednesday. Brent crude erased overnight gains to slip 0.61 percent, trading at $56.59 a barrel. U.S. West Texas Intermediate crude fell 0.66 percent to trade at $50.96.