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Asian shares gain on Fed outlook with regional data assessed

Published 02/17/2016, 11:49 PM
Updated 02/17/2016, 11:51 PM
© Reuters.  Shares in Asia gain

Investing.com - Asian shares gained on Thursday with investors digesting a suite of regional data that points to continued easy monetary policies and the latest insight into Federal Reserve thinking on interest rates.

The Nikkei 225 rose 2.64%, while the S&P/ASX 200 gained 2.11% and the Shanghai Composite edged up 0.44%.

Consumer prices in China rose 0.5% in January month-on-month, matching expectations and at the same level as the previous month.

For a year-on-year basis, consumer prices gained 1.8%, below the 1.9% gain expected, and compared to 1.6% from the previous month.
Producer prices fell 5.3%, compared to a 5.4% drop seen, and to a fall of 5.9% in the previous month.

"The pick-up in inflation last month is mostly seasonal. That said, underlying price pressures also appear to be rising which ought to help ease any lingering concerns over deflation," Capital Economics said in a note to clients.

"The key driver was a seasonal jump in food price inflation, from 2.3% y/y to 4.1%. Food prices always rise ahead of Chinese New Year but due to the shift in the timing of the holiday, more of this increase took place in January this year relative to 2015."

The People's Bank of China set the yuan's central parity rate against the U.S. dollar at 6.5152 Thursday, stronger than Wednesday's 6.5237.

The Federal Reserve's January meeting provided little indication that the U.S. central could accelerate its pace of tightening in the foreseeable future.

"Many participants indicated that their assessment of the balance of risks associated with the timing of the beginning of policy normalization had inclined them toward keeping the federal funds rate at its effective lower bound for a longer time," the FOMC said in the minutes.

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"Some observed that, even with these risks taken into consideration, the federal funds rate may have already been kept at its lower bound for a sufficient length of time, and that it might be appropriate to begin policy firming in the near term."

In Japan the trade balance for January came in at ¥646 billion, near the ¥680 billion seen along with imports that fell 18%, more than the expected down 16% and exports dropped 12.9%, more than the 11.3% year-on-year seen.

Prolonged financial market turmoil would hurt the real economy, although risk aversion is unlikely to trigger a global financial system crisis as seen in the past, Bank of Japan board member Koji Ishida said Thursday.

In Australia, employment data fell by 7,900 jobs, off the 15,000 jobs seen added in January for an unemployment rate of 6.0%, higher than the 5.8% expected.

"The 7,900 decline in employment in Australia is probably just a continuation of the data moving back to reality after the unbelievable strength late last year rather than a sign that the concerns over the global economy are giving Australian employers the jitters," Capital Economic said in a note to clients.

Overnight, U.S. stocks were higher after the close on Wednesday, as gains in the Oil & Gas, Technology and Basic Materials sectors led shares higher.

At the close in NYSE, the Dow Jones Industrial Average gained 1.59%, while the S&P 500 index added 1.65%, and the NASDAQ Composite index added 2.21%.

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