Asia report: Markets higher ahead of Fed meeting

Most Asian markets managed a green finish on Monday, though investors still kept volumes lighter as they turned their attention towards a likely rate hike from the Federal Reserve later in the week.

Japan’s Nikkei 225 was up 0.15% at 19,633.75, with the yen weakening even further against the dollar.

It was last slightly stronger after Japanese traders went to bed, advancing 0.14% to JPY 114.63 per $1.

Official data released early in the day showed a 3.2% fall in the country’s core machinery orders, well off estimates for a 0.5% increase as picked by a Reuters poll.

Prime Minister Shinzo Abe also saw his approval rating slide six points to less than 56% over the weekend, after the country’s parliament had spent weeks questioning a land deal struck by a schools operator linked to his wife.

On the mainland, the Shanghai Composite was up 0.76% at 3,237.02, and the Shenzhen Composite was 0.8% higher at 2,029.89.

Hong Kong’s Hang Seng Index added 1.11% to finish at 23,829.67, with shares in HSBC rising in the special administrative region after news emerged that AIA Group chief executive Mark Tucker was to replace Douglas Flint as chairman of the bank.

In South Korea, the Kospi was up 0.97% at 2,117.59, with investors seemingly brushing off the removal of impeached President Park Geun-hye on Friday.

Park departed the presidential Blue House on Sunday, after the country’s Constitutional Court ruled to uphold her impeachment, voted on by the National Assembly, for the cash-for-influence corruption scandal surrounding her and Samsung Group chief Jay Lee.

“[This ruling] implies that the Korean society chose reform and justice over concerns on near-term economics and stability,” noted Nomura Securities managing director CW Chung.

“From now on, the issue is whether such political changes can lead to improvements in commercial laws and renovation in old-fashioned practices and eventually the re-rating of the Korean stock market.”

The Federal Open Market Committee was scheduled to meet on 14-15 March, with most commentators expecting a rise in interest rates.

CME Group’s FedWatch reported an 88.6% expectation for a rise during Asian hours on Monday.

“The key to market performance this week is the response to the US lift in rates,” noted CMC Markets chief market strategist Michael McCarthy.

“Such a well-flagged and expected move is unlikely to disrupt the current optimism, even if the Fed takes the opportunity to re-iterate a steeper tightening path.”

Oil prices extended their losses during Asian trading on Monday, with Brent crude last down 0.1% at $51.32 per barrel and West Texas Intermediate losing 0.27% to $48.36.

It was a redder day down under, as the S&P/ASX 200 lost 0.32% to 5,737.35, dragged down by significant losses in the energy subindex.

Gold miners were higher though, as prices for the safe-haven metal rose ahead of the Fed decision, with Alacer Gold up 4.82%, Evolution Mining gaining 6.81% and Newcrest Mining 4.63% firmer.

In New Zealand, the S&P/NZX 50 gained 0.2% to 7,194.79, with Heartland Bank rising 1.9% to an all-time high, while local retail giant Warehouse Group dropped 0.4% after news it would be ditched from the benchmark index, to be replaced by seafood firm Sanford.

The down under dollars were both stronger on the greenback, with the Aussie advancing 0.39% to AUD 1.3208 and the Kiwi strengthening 0.18% to NZD 1.4420 per $1.