ASIAN MARKET UPDATE ……. Wednesday 30-3-2016
Asia Pacific region stock markets finished mostly higher Wednesday, on the back of U.S. Federal Reserve Yellens signal for a slow pace on raising interest rates.
“[Ms. Yellen] and the Fed have finally realized that the only way they can safely start to normalize interest-rate policy in the U.S. is if they pay attention to the problems the dollar is creating in the rest of the world,” said Brett F. Ewing, chief market strategist at First Franklin Financial Services.
The gains continue in March after four straight losing months: Shares in China and Hong Kong, are up more than 8% since the beginning of the month.
On Wednesday, Chinese shares led gains amid local speculation about an additional state-owned player supporting the market. The Shanghai Composite Index finished up 2.8% at 3000.64.
Hong Kong’s Hang Seng Index closed up 2.2%, South Korea’s Kospi was up 0.4% and Australia’s S&P ASX 200 up by 0.1%.
Japan’s Nikkei Stock Average fell 1.3%, however, as the Japanese yen strengthened against the U.S. dollar. A stronger local currency tends to hurt the competitiveness of Japanese exporters.
Market players said appetite for riskier assets was further diminished by investor caution ahead of U.S. jobs data scheduled to be released on Friday.
The Nikkei share average fell 1.3 percent to 16,878.96 for its lowest close in nearly two weeks.
Shares of Takata Corp plunged 19.5 percent after Bloomberg News reported the company’s worst-case scenario for its recall could involve 287.5 million potentially defective air bag inflators.
The Topix subindex for marine transportation shed 4 percent as shares of Japan’s shipping companies were heavily sold throughout the afternoon session.
The broader Topix fell 1.6 percent to end the day at 1,356.29 with each of its 33 subindexes in negative territory.
The JPX-Nikkei Index 400 declined 1.6 percent to 12,249.67.
Investors have stepped up buying in Asia this month: In March, foreign investors pumped $10.5 billion into emerging Asian equities outside of China, according to a report by Credit Suisse published Wednesday. The firm said that marked the ninth largest month of buying into that region since its data started a decade ago. Foreign buying, it added, was largely concentrated in Taiwan, South Korea and India.
In China, Bank of Communications Co. Ltd. disclosed in its 2015 annual report Tuesday that an investment firm controlled by the China’s foreign-exchange regulator owned 1.07% of the bank’s shares. This stirred expectations of continued government intervention in the stock market, which remains down 42% from its peak in June.
OVERNIGHT IN THE U.S—
Overnight, the Dow Jones Industrial Average and the S&P 500 closed at their highest levels of the year, with the S&P 500 up 0.5%returning to positive territory for 2016.
Higher U.S. rates boost the dollar by making the currency more attractive to yield-seeking investors, weakening other global currencies. Worries about that happening and in turn pressuring emerging market stocks have eased since the Fed has slowed down its path to raise rates.