Asia report: Weak yen, strong Nikkei lead markets higher

The Japanese benchmark advanced 3.23% to 16,911.05, coming off the yen’s recent weaker performance against the dollar. Japan’s markets had been under pressure in recent weeks as the yen march stridently towards the JPY 107 mark.

It retreated to the 109 level during trading, though strengthened sharply again after local markets closed. It was last ahead by 0.18% at JPY 109.14 per US dollar.

The weakened yen led most major exporters higher, with carmakers Honda, Nissan and Toyota adding between 1.93% and 3.25%. Sony reversed earlier losses to close up 0.4%.

Markets on the mainland ended higher after choppy trading. The Shanghai Composite Index gained 0.52% to 3,082.54, while the Shenzhen Composite added 1.02% to 1,982.45.

South Korea’s Kospi returned after taking a break on Wednesday for the country’s legislative elections, rising 1.75% to 2,015.93. Hong Kong’s Hang Seng Index rose 0.85% to 21,337.81.

In Singapore, the Straits Times Index added 0.94% after the release of economic growth numbers for the January-March quarter.

Gross domestic product in the city-state expanded 1.8% year-on-year, above the 1.7% forecast in a Reuters poll. GDP quarter-on-quarter was flat, as expected.

At the same time, markets in the region were taken by surprise as the Monetary Authority of Singapore eased its currency policy.

The central bank set the rate of appreciation of the Singapore dollar’s trading band at zero. Exchange rates are used to set monetary policy in the country, rather than interest rates.

“The MAS monetary policy statement was dovish across the board. There was a clear downgraded in MAS’s growth and inflation assessment without them downgrading their actual forecasts,” analysts at ANZ noted.

Singapore’s dollar weakened immediately after the release, and was last trading 0.96% weaker at SGD 1.3636 per USD.

Oil prices weakened during Asian trading, with Brent crude last down 0.32% at $44.04 and West Texas Intermediate down 0.22% at $41.67 per barrel.

The falls came after reports emerged overnight that Russian oil minister Alexander Novak told a closed-door briefing that the oil production freeze deal to be signed in Doha will lack detailed and firm commitments.

“We believe any agreement to freeze production would be largely symbolic. Meanwhile, we see minimal likelihood of OPEC cutting total output from current high levels,” a research note from Nomura said.

National Australia Bank currency strategist Rodrigo Catril said gains in financial stocks were helping markets globally, noting “risky assets have continued to benefit from an improvement in sentiment.

"Bank stocks have led the surge in equity markets and most commodities have also enjoyed some gains, despite of a pullback in oil prices. The dollar is broadly stronger with safe haven currencies the underperformers," Catril said.

Down under, the S&P/ASX 200 closed up 1.27% to 5,118.60. The weighty financials subindex bolstered Sydney’s performance, with the big four Australasian banks - Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac - adding between 1.33% and 2.64%.

Early in the session, a fresh release from the Australian Bureau of Statistics showed the unemployment rate in the country as falling slightly to 5.7%, with 26,100 jobs being added to the sunburnt country’s economy. A Reuters-polled forecast had picked a figure of 5.9%, with 20,000 jobs added.

New Zealand saw another record-breaking day, with the benchmark S&P/NZX 50 rising 0.7% to hit a fresh all-time high of 6,823.82. The Australasian banks also led on that side of the Tasman Sea, with Westpac up 4.4% and Australia and New Zealand Banking Group advancing 3.9% in Wellington trading.

The Aussie dollar moved ever closer to the greenback, and was last 0.46% stronger at AUD 1.3008, while the choppy Kiwi weakened by 0.78% and was trading at NZD 1.4562 per USD.