Dollar holds advance; Japanese shares climbed to the highest since August 2015 

• Dollar holds advance after Fed’s Dudley comments on rates path

• Hong Kong stocks erase gains before MSCI decision on A-shares

Asian stocks advanced as technology shares continued a rebound and hawkish comments from a Federal Reserve official allayed concerns about the strength of the world’s largest economy. The dollar held gains as the yen weakened.

Japanese shares climbed to the highest since August 2015. Samsung Electronics Co. led tech shares for a second day, after the Nasdaq 100 Index jumped the most since November. Hong Kong equities erased an earlier advance ahead of MSCI Inc.’s decision on whether to include China’s domestic equities in benchmark indexes. Treasuries fell Monday after Fed Bank of New York President William Dudley said halting the tightening cycle now would imperil the economy.

“We’ve seen some unimpressive economic data recently, but Dudley appears unperturbed by them, providing relief for market participants,” said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co. in Tokyo.

Dudley aligned himself with Chair Janet Yellen in declaring his expectation that a tight labor market will eventually trigger a rebound in inflation data that has been unexpectedly weak in recent months. His comments were followed by remarks from Chicago Fed President Charles Evans, who said “the current environment supports very gradual rate hikes and slow preset reductions in our balance sheet.”

Fed officials last week raised their benchmark interest rate for the third time in six months and pushed ahead on plans to begin reducing the central bank’s $4.5 trillion balance sheet later this year, despite growing concerns over stalling inflation.

Here are some of the key upcoming events:

• Vice-Chair Stanley Fischer speaks Tuesday, with Fed officials making making appearances throughout the week. Still to come: Eric Rosengren, Robert Kaplan, Jerome Powell, James Bullard and Loretta Mester.
• MSCI announces whether it approved Chinese-listed stocks in its global benchmarks. The $6.8 trillion onshore market is the world’s second largest and accounts for 9 percent of global stock value, but has been rejected for index inclusion three times by MSCI over issues including capital controls and long trading halts. MSCI’s decision is expected Tuesday after the close of U.S. markets.

Here are the main moves in markets:

Stocks

• Japan’s Topix rose 1 percent as of 1:11 p.m. in Tokyo, gaining for a third day to the highest since August 2015.
• Australia’s S&P/ASX 200 Index slipped 0.4 percent. The country’s largest banks retreated following ratings downgrades from Moody’s Investors Service.
• South Korea’s Kospi was little changed. Samsung rose 2.8 percent, heading toward the biggest two-day increase since October.
• Hong Kong’s Hang Seng Index fell 0.1 percent, reversing an earlier gain of 0.5 percent, and the Shanghai Composite Index edged up less than 0.1 percent.
• Futures on the S&P 500 Index increased 0.1 percent. The underlying gauge rose 0.8 percent Monday as tech and health-care shares climbed. The Stoxx Europe 600 Index rose 0.9 percent.

Currencies

• The yen slid 0.1 percent to 111.68 per dollar. The South Korean won dropped 0.4 percent, and the Australian dollar lost less than 0.1 percent.
• The Bloomberg Dollar Spot Index was flat after advancing 0.4 percent on Monday. The measure has been climbing after touching the lowest level since October last week.

Bonds

• The yield on 10-year Treasuries was little changed at 2.19 percent, after rising four basis points Monday.
• Australian 10-year yields increased two basis points to 2.42 percent.

Commodities

• Oil was little changed at $44.22 a barrel, after settling at the lowest level since November on Monday. Crude has fallen for four weeks straight as U.S. drillers continue to add rigs, blunting OPEC-led efforts to rebalance an oversupplied market.
• Gold rose 0.1 percent to $1,245.19 an ounce, after closing Monday at the lowest in more than a month.

Source: Bloomberg – Asia Stocks Rise on Yen Weakness, Tech Share Gains: Markets Wrap

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