Asia report: Markets mixed as Fed stands pat

Markets in Asia were mostly mixed on Thursday, as oil prices surged during the session and the dollar weakened against the region’s major trading currencies.

Japanese markets were closed for the Culture Day public holiday, though the yen was ahead, and was last 0.1% stronger against the greenback at JPY 103.20 per $1.

On the mainland, the Shanghai Composite was up 0.84% to 3,128.94, and the Shenzhen Composite finished 0.48% higher at 10,743.96.

Before the markets opened, a private Caixin PMI survey showed strong growth in the service sector month-on-month, with a 52.4 reading for October.

In South Korea, the Kospi was up 0.25% at 1,983.80, while Hong Kong’s Hang Seng Index lost 0.56% to 22,683.51.

Seoul’s finish came a day after the announcement of a cabinet reshuffle on Wednesday, in which the new finance minister Yim Jong-yong promised to maintain an accommodative macroeconomic policy to help stabilise the shaky economy.

Korea has faced a number of challenges this year, including natural disasters, a presidential scandal and the collapse and restructure of its shipping industry.

Stateside, traders had their predictions gratified by the Federal Reserve in the US overnight, which held interest rates steady at 0.25%-0.5%.

The central bank still cautioned that the case for raising rates was still strengthening.

“The Federal Reserve have effectively given the green light to a December rate hike, that is as long as we don't see a major disruptive event playing out between now and 14 December,” noted IG chief market strategist Chris Weston.

Oil prices were ahead during Asian trading, with Brent crude last up 0.74% at $47.21 per barrel and West Texas Intermediate also adding 0.74% at $45.68.

The price rises were likely due to a weaker dollar, with domestic prices in the US under pressure from fresh Energy Information Administration data showing a 14.4 million increase in crude inventories for the week to 28 October.

That was much higher than the one million barrel rise picked by economists polled by Reuters, and on trend with the American Petroleum Institute reading earlier in the week.

“The fact oil prices are in free fall will not help clarity here given the Fed's overnight statement was fairly upbeat around the recent rise in market based inflation expectations, but this move in inflation expectations was largely driven by a rally above $50,” Weston said.

Australia’s S&P/ASX 200 lost 0.07% to 5,225,60, with energy and gold helping to stem the losses, up 0.72% and 3.44% respectively.

Real estate marketing company REA Group lost 3.75%, after Deutsche Bank cut its target price to AUD 49.50 from a previous AUD 54.00, citing a weak property listing environment in the sunburnt country.

Australia and New Zealand Banking Group gained 0.63% in Sydney trading, after reporting a decline in annual cash profit of 18% - wider than the 15% fall predicted by analysts.

The bank also indicated it could sell its Australia-based insurance and wealth division to free up around AUD 5bn.

That would follow on from the announcement on Monday that Singapore’s DBS was to acquire ANZ’s retail banking and wealth management businesses in Singapore, China, Hong Kong, Indonesia and Taiwan.

New Zealand’s S&P/NZX 50 lost 1.1% to fall into correction territory, settling at 6,778.93.

It was led lower by Metro Performance Glass, which dropped 3.8%, while subscription broadcaster Sky - not related to the British firm - dropped 3.6% and retirement healthcare operator Metlifecare fell 2.9%.

The down under dollars were both stronger against the soft greenback, with the Aussie last ahead 0.09% at AUD 1.3041, and the Kiwi strengthening 0.2% to NZD 1.3695 per $1.