Monday, September 26, 2022

Asian shares edge up

Asian shares edge up

TOKYO - Asian shares shook off early losses on Friday, underpinned by gains on Wall Street, while the dollar rebounded from a pause to its recent rally after disappointing US retail sales data.

MSCI's broadest index of Asia-Pacific shares outside Japan. MIAPJ0000PUS was up about 0.1 percent on the day. It was well off 7-week lows plumbed earlier in the week but still on track for a weekly loss of around 2 percent.

Japan's Nikkei stock average .N225 rose 1.6 percent, extending the previous session's 15-year closing high and on track to log its fifth winning week. The robust gains were partly due to a 12 percent surge in shares of industrial robot maker Fanuc Corp (6954.T), which has a disproportionately high weighting in the Nikkei. A report said the company is considering raising dividends.

On Wall Street, US shares rallied on Thursday, but the S&P 500 .SPX was still on track to post its third consecutive weekly decline, hit by the prospect of higher US interest rates and the effect of the strong dollar on corporate earnings.

But the dollar pulled away from its recent multi-year highs after US retail sales unexpectedly fell in February, a month marked by harsh weather. That tempered the outlook for first-quarter growth and gave investors reason to doubt that the Federal Reserve might hike interest rates as early as June.

However, many investors' rate-hike bets remained intact after last week's stronger-than-expected US payrolls report. The Fed's policy-setting committee meets on March 17-18, and investors hope the meeting will yield further clues about the timing of the rate increase. - Reuters

"Despite the improvements in the labor market, rises in wages and decline in gas prices, Americans cut spending for the third month in a row but judging from the price action of the greenback, dollar bulls are telling themselves that weak retail sales does not change the bigger story of monetary policy and growth divergence," Kathy Lien, managing director at BK Asset Management, said in a note to clients.

Lien expects the US central bank to tighten in September.

The dollar index .DXY edged lower to 99.357 after skidding 0.4 percent on Thursday - its biggest one-day fall in a month. The index earlier rose as far as 100.060, a high not seen since mid-April 2003, and was still on track to end the week up more than 1 percent.

Against its Japanese counterpart, the dollar rose about 0.2 percent on the day to 121.46 yen JPY=, moving back toward this week's nearly eight-year high of 122.04.

The euro also shed about 0.2 percent against the greenback to $1.0609 EUR=, but remained well above a 12-year trough of $1.0494 plumbed in the previous session.

In sharp contrast with the Fed, the European Central Bank launched a quantitative easing program this week that sent yields on the debt of nearly all euro zone countries to record lows, and prompted investors to park their funds elsewhere.

"Euro zone debt may look a little over-valued. They will of course remain well bid under ECB's bond buying scheme, but their gains have been too rapid. The euro may thus hold in range in the short term, especially with dollar demand ebbing a little ahead of next week's Federal Reserve meeting," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

Oil prices steadied after an overnight sell-off following estimates showing another big supply build at the delivery point for the US crude contract.

US crude CLc1 edged up about 0.1 percent to $47.09 a barrel after plunging 2.3 percent in the previous session, while Brent LCOc1 added about 0.1 percent to $57.15 after shedding nearly 1 percent.