Asian shares shrug off energy blues, dollar firms

TOKYO: Asian shares rose on Tuesday, taking heart from record closes on Wall Street and upbeat economic data that lifted US Treasury yields and the dollar, even as weaker oil prices took their toll on energy stocks. Futures suggested a firm start to the European trading day, with the Eurostoxx 50 up 0.3 per cent and FTSE futures up 0.1 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.4 per cent higher in afternoon trade, clawing back losses from earlier in the Asian day. Japan’s Nikkei stock index ended up 1.1 per cent as a tailwind from a weaker yen helped power it to its highest levels since August 2015.
Markets in China and South Korea were closed for holidays.
Hong Kong’s Hang Seng index rose 1.9 per cent as trading resumed following a public holiday on Monday, led by mainland banks and insurers after China’s central bank cut reserve ratios over the weekend to encourage lending.
Materials shares also gained after Beijing reported stronger-than-expected September factory activity.
The Hong Kong China Enterprises Index rallied 3.2 per cent. Australian shares slipped 0.5 per cent, pressured by financial and energy shares.
The energy index, which has moved largely in tandem with the main index in recent sessions, skidded 1 per cent in line with weaker crude prices.
As widely expected, the Reserve Bank of Australia kept interest rates on hold at a record low of 1.5 per cent.
The RBA said a stronger local currency would slow the economy and restrain price pressures.
The dollar index, which tracks the greenback against a basket of six major rivals, added 0.3 per cent to 93.839, after nudging up to its highest levels since August 17.
The euro eased 0.2 per cent to $1.1709, facing pressure from Spain’s biggest constitutional crisis in decades, after Sunday’s violence-marred independence referendum in Catalonia opened the door for its wealthiest region to move for secession as early as this week.
The dollar added 0.3 per cent against its Japanese counterpart to 113.11 yen, within sight of last week’s two-month high of 113.26 yen.
Proposed US tax code changes as well as the possibility that US President Donald Trump will appoint a more hawkish Fed Chair also gave the dollar a lift.
Crude oil futures extended losses after tumbling on Monday, as a rise in US drilling and higher Opec output put the brakes on their recent rally and rekindled concerns about oversupply.
Brent crude slipped 0.4 per cent to $55.90 a barrel, after marking a third-quarter gain of about 20 per cent.
US crude fell 0.3 per cent to $50.42.
“The fourth quarter is not too kind to the price of oil, as we switch from summer demand to expectations of winter demand,” said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney.
On Wall Street on Monday, US stocks started the fourth quarter on a strong note, with all three major indexes closing at record highs after data underscored strength in the economy. A measure of US manufacturing activity surged to a near 13-1/2-year high in September.
Disruptions to the supply chains caused by Hurricanes Harvey and Irma resulted in factories taking longer to deliver goods and boosted raw material prices.
The Institute for Supply Management index rose to 60.8 in September, from 58.8 in August, exceeding expectations for a reading of 58.
US construction spending also rebounded in August after two straight months of declines, boosted by increases in both private and public outlays.
The dollar’s gains came on the back of rising US Treasury yields.
The yield on the benchmark 10-year note hit its highest since mid-July on Monday after the upbeat data reinforced expectations that the Federal Reserve will increase US interest rates in December for a third time this year. — Reuters

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