Asia report: Markets higher as traders focus on Fed, oil

Markets in Asia were mostly higher on Thursday, as investors digested the Federal Reserve’s May meeting minutes amid strengthened hopes for deeper oil production cuts at an upcoming OPEC meeting.

Japan’s Nikkei 225 ended up 0.36% at 19,813.13, as the yen weakened 0.38% to trade at JPY 111.91 against the greenback.

On the mainland, the Shanghai Composite was 1.43% higher at 3,107.87, while the Shenzhen Composite ended up 0.73% at 1,811.90.

The rises came a day after Moody’s downgraded China’s credit rating, but lifted its outlook.

On the regulatory front, fines were handed down to the brokerages Citic Securities, Guosen Securities and Haitong Securities, for violations of finance rules.

All three brokerages were trading higher on both mainland and Hong Kong markets, as traders appeared to shrug off the fines.

In South Korea, the Kospi was 1.1% firmer at 2,342.93, while Hong Kong’s Hang Seng Index ended up 0.8% at 25,630.78.

Hong Kong also saw its rating downgraded by Moody’s on Wednesday, following the downgrade for mainland China.

The agency said Hong Kong’s downgrade was simply down to the impact of trends in mainland China on the special administrative region.

Seoul chipmaker SK Hynix announced during the session that its chip foundry unit would be spun out into a separate structure.

SK Hynix, which finished flat on the news, is the world’s second largest chip maker, after fellow Korean firm Samsung.

Stateside, the release of minutes from the May meeting of the Federal Open Market Committee suggested the central bank was looking to utilise a system to cap how much the Fed could roll off its balance sheet each month, without reinvesting.

That balance sheet was currently worth $4.5trn.

The Fed also indicated that another hike in interest rates could be coming soon, though the committee members said it would be “prudent” to play wait-and-see to ensure recent soft economic data was not a sign of something permanent.

One eye was also fixed on oil markets, ahead of a meeting of OPEC producers in Vienna.

Markets had indicated they widely expect the meeting to end with a deal to deepen output cuts, in the hope it would help tilt back the balance of the crude markets.

Brent crude was last down 1.43% at $53.20 per barrel, and West Texas Intermediate lost 1.64% to $50.53.

Australia’s S&P/ASX 200 settled 0.36% higher at 5,789.63, as New Zealand’s S&P/NZX 50 managed a 0.2% rise to 7,434.47.

In that country, Finance Minister Steven Joyce took the wraps off his maiden budget during the session, which included some adjustments to tax thresholds in an apparent bid to line household pockets during an election year.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.5% at AUD 1.3393 and the Kiwi retreating 0.39% to NZD 1.4239.