Fed relief lifts Asian stocks

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IOL pic july7 market arrows . Photo: Filomena Scalise

Tokyo - Asian stocks rose and the dollar dipped on Thursday after the Federal Reserve indicated it was in no rush to end quantitative easing and begin raising interest rates.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3 percent.

Tokyo's Nikkei bucked the trend and fell 0.3 percent, weighed down by a sharp drop in machinery orders that cast doubt over the outlook for capital spending.

The reaction of risk assets and currencies to Chinese trade data was limited, as the performance of the global powerhouse improved but still fell short of expectations.

“The trade figures were not so exciting. It's still unrealistic to count on exports to be an important contributor to economic growth,” said Wang Jun, an economist at the China Centre for International Economic Exchanges in Beijing.

“The import figure showed some signs of improvement on domestic demand. Taken together with weak inflation data, we think domestic demand remains weak. It would be relatively difficult for China to achieve its annual trade growth target of 7.5 percent in 2014.”

Indonesian stocks hit their highest in over a year as the market welcomed the prospect of reform-minded Jakarta Governor Joko “Jokowi” Widodo becoming the next president, although his rival has refused to concede defeat after Wednesday's election.

The Jakarta market was up 1.7 percent after earlier rising more than 2 percent.

According to minutes from the last Federal Reserve meeting released on Wednesday, the central bank acknowledged the recent strengthening in the US economy but suggested it was unlikely to raise policy rates until the second half of 2015.

The absence of a more hawkish message from the Fed eased worries over interest rate rises and helped Wall Street snap a two-day slide on Wednesday, while driving US Treasury yields lower.

“The Fed Minutes did not deliver anything new,” strategists at CitiFX wrote in a note to clients. “No one expected a more dovish message so the hawks are caught offside.”

The dollar slipped 0.1 percent to 101.58 yen, weighed down by the lower Treasury yields. The yen was unfazed by the decline in machinery orders, which can fluctuate widely from month to month.

The euro stood little changed at $1.3645 after gaining more than 0.2 percent against the greenback the previous day.

The New Zealand dollar hit a three-year high against the dollar, riding on a tailwind created after ratings agency Fitch upgraded its outlook on the country's AA rating to positive.

The kiwi touched $0.8839, its highest since August 2011. In contrast, the Australian dollar slipped after a rise in the jobless rate.

In commodities, copper pulled back from a five-month high hit on Tuesday as a rally driven by shrinking supply petered out.

Three-month copper on the London Metal Exchange traded at $7,126.75 a ton, flat from the previous session. It hit a five-month peak of $7,212 on Tuesday.

Crude oil extended losses on faltering US demand for gasoline and a Libyan oil field resuming output.

US crude fell 0.4 percent to $101.86 per barrel. - Reuters


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