Asian Shares Shed Early Gains
Asian shares shed some of their early gains by midday Tuesday as sentiment regarding the course of U.S. interest-rate policy continues to play heavily on market direction.
Fears of a rate increase, which have built in recent days, eased following dovish comments overnight from U.S. Federal Reserve Gov. Lael Brainard ahead of next week’s Federal Open Market Committee meeting. She said that the central bank’s 2016 caution on rates “has served us well in recent months, helping to support continued gains in employment and progress on inflation.”
Comments from two other Fed officials offered hope to markets that the central bank may give itself room to hold off raising interest rates further at least until year-end.
After their biggest declines since late June on Monday, Australia’s S&P/ASX 200 rose 0.2% and Korea’s Kospi gained 0.6%. The Nikkei Stock Average was up 0.3% with all three indexes notching stronger initial gains Tuesday morning. Overnight, U.S. stocks reversed more than half of their slide on Friday and logged their biggest jump in two months.
Castor Pang, head of research at Core Pacific Yamaichi International, said the dovish comments from Ms. Brainard helped to calm nerves, but “will not help the market recover all the losses.”
However, some analysts point to corporate earnings in Asia picking up and say concerns that foreign money will be pulled out of the region due to higher U.S. interest rates are overdone. “I don’t think a rate hike will be a problem,” said Arthur Kwong, head of Asia-Pacific equities at BNP Paribas Investment Partners, adding that a correction in global markets would be a good opportunity to buy stocks because of attractive valuations.
Hong Kong’s Hang Seng Index rose 0.9% after logging its third-biggest decline of the year on Monday. The Shanghai Composite has struggled to find direction thus far Tuesday and has been near Monday’s close throughout the day, recently sitting down 0.2% despite August’s industrial production in China accelerating a little faster than expected.
In South Korea, customs data Tuesday showed there was a surge in electronics components and car parts entering the country from Korean-run plants in Vietnam and China. Major exporters are modestly higher, in line with the Kospi’s gain. August’s trade surplus narrowed more than anticipated, as imports were significantly revised up from earlier estimates for the month.
Samsung Electronics Co.’s share price rebounded 5.5% after recording its worst day in four years on Monday, and Hanjin Shipping Co. rose 1.2% after the first of its stranded U.S.-bound vessels began off-loading containers in California yesterday.
Elsewhere in Asia, shares of Japanese chip maker Renesas Electronics Corp. rose 1% following an agreement to buy U.S. peer Intersil Corp. for $3.2 billion. The stock gain came despite some market participants raising concerns about the hefty price of the deal and the Japanese company’s ability to establish itself as the industry leader in fields such as self-driving cars.
Source: WSJ
