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Asian shares gain in cautious trade, holidays in U.S., U.K. noted

Published 05/29/2016, 11:52 PM
Updated 05/29/2016, 11:54 PM
© Reuters.  Shares in Asia gain

Investing.com - Asian shares made gains in morning trade on Monday with sentiment cautious following remarks last week that signal at least one Federal Reserve rate hike this summer and in thin dealing with markets in the U.S. and U.K. shut for holidays.

The Nikkei 225 rose 1.08% and the S&P/ASX 200 edged out a 0.07% gain.

The Shanghai Composite Index rose 0.33%, while Hong Kong's Hang Seng Index gained 0.57%.

The yuan fell against the dollar Monday after the People's Bank of China set the fixing at the weakest level since end February 2011 at 6.5784 Monday, compared with Friday's mid point of 6.5490.

Last week, U.S. stocks ticked up on a volatile final session before the Memorial Day holiday, as Janet Yellen rattled Wall Street by offering strong indications that the Federal Reserve could raise interest rates in the coming months.

Building off hawkish comments from her colleagues on the Federal Open Market Committee over the last two weeks, Yellen said Friday afternoon that it could be appropriate for the Fed to implement an imminent rate hike if the economy and labor markets continue to show improvement. The FOMC has left its benchmark Federal Funds Rate at a targeted range between 0.25 and 0.50% in each of their three meetings in 2016, after halting a seven-year zero interest rate policy in December.

Any rate hikes from the Fed this year are viewed as bearish for equities, as investors pile into safer investments such as government bonds in order to capitalize on higher yields.

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"It’s appropriate for the Fed to gradually and cautiously increase our overnight interest rate over time,” Yellen said in a Question-And-Answer session with Harvard economics professor Gregory Mankiw.

The Dow Jones Industrial Average gained 44.93 or 0.25% to 17,873.22, while the NASDAQ Composite index added 31.74 or 0.65% to 4,933.51, rallying late in the session after briefly turning negative in response to Yellen's remarks. The S&P 500 Composite index, meanwhile, rose 8.96 or 0.43% to 2,099.06, as nine of 10 sectors closed in the green.

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