Asia stocks shine as Fed minutes hint at patience on hike
TOKYO – Asian shares rose on Friday, taking their cue from a jump in oil prices and Wall Street gains after minutes of the Federal Reserve’s latest meeting damped down expectations of an imminent Fed rate hike.
The Fed minutes revealed the extent to which policymakers are concerned that a global economic slowdown might threaten the U.S. economic outlook. Though they said overseas turmoil had not “materially altered” economic prospects, they opted to hold interest rates steady last month.
Riskier asset markets, which had risen when the Fed held off raising rates in September, got a further boost on confirmation policy makers won’t rush to tighten policy at a time of slackening global growth.
“The speculation about an imminent U.S. rate hike was a risk that investors had been dealing with for a long time. Because such concern is fading now, investors are willing to take risks,” said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.6 percent, on track for a robust weekly gain of 6.7 percent.
The S&P 500 closed at a seven-week high on Thursday, though S&P 500 e-mini futures edged down about 0.1 percent in Asian trading.
Japan’s Nikkei stock index added 0.8 percent, poised to gain 3.1 percent for the week.
An unexpectedly weak jobs report for September had led many investors to speculate that the Fed will not deliver its first hike since 2006 until 2016.
Data out on Thursday showed the number of Americans filing new applications for unemployment benefits fell more than expected to near a 42-year low in the week ended Oct. 3, keeping alive the view that improving labour conditions will prompt the Fed to eventually act.
Still, the dollar withered in line with fading near-term rate-hike expectations, with the dollar index down about 0.1 percent in Asian trade at 95.269, on track for a weekly loss of 0.6 percent.
The euro was steady at $1.1278 after scaling a three-week peak of $1.1328 on Thursday, while the dollar was steady against its Japanese peer at 119.93 yen.
Emerging currencies also got a lift from the perception that the Fed will opt to keep rates low for a while longer, with Indonesia’s rupiah rising over 3 percent.
Oil prices climbed to their highest in three months after forecaster PIRA Energy Group predicted crude prices would rise to $70 per barrel by the end of 2016.
Crude oil futures extended overnight gains, with Brent adding 0.4 percent to $53.32 a barrel, while U.S. crude was 0.6 percent higher at $49.70.
Gold added about 0.5 percent to $1,144.56 an ounce, on track for a weekly gain of about 0.6 percent, after volatile trading in the wake of the Fed minutes. A delayed hike to interest rates could support gold in the near term. -Reuters