Asia report: Markets mixed as greenback soars

Markets in Asia finished mixed on Wednesday, with the dollar heading north following some particularly hawkish comments from the Federal Reserve overnight.

Japan’s Nikkei 225 added 0.5% to finished at 16,819.24, with a weaker yen supporting the Tokyo benchmark.

The currency did strengthen slightly after markets closed, however, and was last 0.01% stronger against the greenback at JPY 102.88 per $1.

Markets in mainland China were still closed as the Golden Week rolled on.

South Korea’s Kospi finished down 0.09% to 2,053.0, reversing some earlier losses after inflation data was released, while in Hong Kong the Hang Seng Index added 0.42% to 23,788.31.

Data out from Seoul showed Korea’s consumer price index rose 1.2% year-on-year during September, reaching the highest growth level in seven months, as efforts to boost consumption appeared to be working.

S-Oil shares rose 1.65% after Citi upgraded the stock to a ‘buy’ rating, citing its massive RUC/ODC refining project for their decision.

Late on Tuesday, Jeffrey Lacker, president of the Richmond Fed, indicated his belief in a strong case for interest rates.

On Wednesday, Chicago Fed president Charles Evans told an audience in New Zealand that he is “fine” with the prospect of hiking interest rates this year, providing data supported it.

The expectations for a rate rise helped to lift the US dollar higher.

“The most important factor [for the dollar is] an expectation above 60% now for a Fed Funds hike in December,” noted OANDA senior market analyst Jeffrey Halley.

Oil prices were higher during Asian trading., with Brent crude last up 1.53% at $51.66 per barrel and West Texas Intermediate adding 1.54% to $49.45.

In Australia, the S&P/ASX 200 lost 0.57% to 5,452.9, with losses of 0.35% in the energy subindex and 1.36% in materials dragging the benchmark down.

August retail sales rose 0.4% month-on-month in the sunburnt country, double the expected rate of 0.2%.

Lower interest rates and boosted consumer confidence were said to be behind the rise.

Further east in New Zealand, the S&P/NZX 50 fell 1.1% to 7,271.16, with chicken producer Tegel leading the index lower after losing 4.4%.

It was the latest chapter in the battle of the chooks, as its main competitor Ingham prepared for an IPO and listing on the ASX in Sydney.

There has been speculation that a recent selling-off of Tegel - which was only taken public in May, and initially performed very well - was a product of institutional investors trying to push for a better price for Ingham stock.

The down under dollars were both weaker against the greenback, with the Kiwi retreating 0.37% to NZD 1.3922, while the Aussie was 0.11% weaker at AUD 1.3137 per $1.