Japanese exporters welcomed the weaker yen, sending the Nikkei in Tokyo 0.6% higher by the break. AFP photo
Another round of positive data out of Washington, this time on the key services sector, reinforced opinions that the world’s top economy is back on track and able to deal with the impact of tighter borrowing costs.
“Data has been consistent with the Fed moving in December,” Chris Green, the Auckland-based director of economics and strategy at First NZ Capital Group, said.
“The Fed has a delicate balancing act,” he told Bloomberg News. “They’d want to normalise rates as the economy improves but at the same time they don’t want to scare the financial system.”
US markets rallied Wednesday after the Institute for Supply Management said the services sector expanded at its fastest rate in almost a year in September, rebounding from the previous month’s slump.
The prospects of US rates tightening within three months has rallied the dollar, which bought 103.47 yen in Tokyo — flat compared with late in New York but well up from the levels below 103 yen earlier Thursday in Asia.
Japanese exporters welcomed the weaker yen, sending the Nikkei in Tokyo 0.6 percent higher by the break, putting it on the road to a fourth-straight gain.
– Dollar holds gains –
Hong Kong added 0.3 percent, Sydney was 0.4 percent higher, Seoul put on 0.2 percent and Singapore gained 0.3 percent. Shanghai is closed for a week-long public holiday.
The greenback was also at three-decade highs against the pound, which has been hammered this week after Prime Minister Theresa May set a timeline for Britain to exit the EU by 2019.
However, her comments suggesting she was not a fan of the Bank of England’s loose monetary policy of bond-buying provided some lift to sterling, which also managed to edged up against the euro slightly — though it is still at five-year lows.
The euro has also been given some lift by a report that the European Central Bank is considering winding down its own stimulus programme.
On oil markets both main contracts dipped in Asian trade, having enjoyed a healthy pick-up Wednesday on data showing a surprise drop in US inventories last week.
WTI and Brent each rose about a dollar on the news as the commodity sees some new life after last week’s OPEC agreement to cut production.
Brent is now above the crucial $50 mark that makes drilling cost-effective for companies, while WTI is also approaching the figure.
– Key figures at 0230 GMT –
Tokyo – Nikkei 225: UP 0.6 percent at 16,915.94 (break)
Hong Kong – Hang Seng: UP 0.3 percent at 23,865.76
Shanghai – Composite: Closed for holiday
Pound/dollar: DOWN at $1.2745 from $1.2750 Wednesday
Euro/pound: DOWN at 87.90 pence from 87.91 pence
Euro/dollar: DOWN at $1.1202 from $1.1208
Dollar/yen: DOWN at 103.47 yen from 103.53 yen
Oil – West Texas Intermediate (November): DOWN 16 cents at $49.67 per barrel
Oil – Brent North Sea (December): DOWN 19 cents at $51.67
New York – DOW: UP 0.6 percent to 18,281.03 (close)
London – FTSE 100: DOWN 0.6 percent at 7,033.25 (close)
Tags: Australia, Bank of England, Brexit, China, dollar strengthened against the yen, drop in US inventories, European Central Bank, FTSE 100, Hang Seng, Hong Kong, Japan, Nikkei 225, Nikkei in Tokyo, oil prices, OPEC agreement to cut production, Shanghai, Shanghai Composite, Singapore, U.S. economy, US will hike interest rates, weaker yen