Asia report: Markets mostly higher as Fed concerns increase

Asian markets finished mainly higher on Friday, with investors reacting to the prospect of an interest rate hike in the US this year, as well as data showing price increases in China.

Japan’s Nikkei 225 added 0.49% to 16,856.37, with the broader Topix index rising 0.36% to 1,347.19.

A relatively weaker yen boosted the domestic markets, with the currency last

The major exporters were mostly higher thanks to the currency movements, with Honda up 0.69%, Nissan gaining 0.81% and Toyota 0.4% higher.

Fashion giant Fast Retailing - which owns the Uniqlo chain - was up 4.98%, following its Thursday announcement that it expects operating profit for financial year 2017 to jump 37.5%.

Softbank shares were up 3.29%, after it emerged the company might be working with Saudi Arabia to launch a London-based technology fund worth up to $100bn.

On the mainland, the Shanghai Composite was up 0.08% to 3,063.73, while the Shenzhen Composite added 0.12% to 2,046.74.

The country’s consumer price index was up 1.9% year-on-year in September, fresh data from Beijing showed, while producer prices were up 0.1%.

They were larger increases than picked up economists, suggesting some underlying strength in the world’s number two economy.

Reports emerged during the session that two of China’s state-owned chemical companies - Sinochem and ChemChina - are discussing a merger, which would create an organisation with a combined $100bn in annual revenue.

Shares in Sinochem and ChemChina were up 9.99% and 4.03% respectively.

South Korea’s Kospi was up 0.36% to 2,022.66, while Hong Kong’s Hang Seng Index added 0.88% to 23,233.31.

Embattled technology giant Samsung was up 1.28%, even after a pre-open announcement that it expects a KRW 3.5trn wound in its operating profit over the next two quarters as a result of the failed Galaxy Note 7 and the surrounding PR disaster.

Analysts were confident, however, saying the conglomerate’s strong balance sheet and decent liquidity should allow it to take the hit.

Friday in Asia was marked by muted sentiment, following on from weak trade data from China on Thursday.

“The global theme was marked by a lack of coherent story except for perhaps modest dollar relapse that gave back part of recent gains,” noted Mizuho Bank senior economist Vishnu Varathan.

“To be sure, this is a long way off any meaningful reversal.”

Traders were also mulling over the prospect of another Federal Reserve rate hike in the US this year, after Wednesday’s release of meeting minutes showing a number of officials concerned about waiting too long to increase rates.

Federal Reserve chair Janet Yellen was due to make a speech during the US afternoon on Friday.

In Thailand, the SET was up 4.59% at 1,477.61 even after the news on Thursday that 88-year-old King Bhumibol Adulyadej had died.

Baht was stronger against the greenback, gaining 0.29% to THB 35.303 per $1.

Oil prices were ahead overnight and through the Asian trading day, after data from the US showed drawdowns in domestic fuel stockpiles, against some serious increases in crude stockpiles.

The Energy Information Administration reported crude stocks in the US increased 4.9 million barrels in the week to 7 October, against expectations for a 700,000 barrel rise.

Distillates - including diesel and heating oil - fell 3.7 million barrels in the same time, while gasoline stockpiles were 1.9 million barrels lower.

Brent crude was last up 0.69% at $52.39 per barrel, while West Texas Intermediate increased 1% to $50.95.

Australian stocks were more or less flat, with the benchmark S&P/ASX 200 down 0.03% to 5,434.03.

The financials and materials subindexes weighed on the benchmark, losing 0.26% and 0.46% respectively.

Of the major miners, BHP Billiton was down 0.92% in Sydney, with Fortescue Metals off 0.41% and Rio Tinto 1.01% lower.

New Zealand’s benchmark S&P/NZX 50 added 0.2% to 7,133.26, with flag carrier Air New Zealand rebounding 1.9% after a serious slip on Thursday.

The down under dollars were mixed, with the Aussie last 0.68% stronger at AUD 1.3122 per $1, while the Kiwi remained flat, at NZD 1.4094 against the greenback.