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Asia: Markets rise as focus turns to release of Federal Reserve minutes

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[HONG KONG] Asian markets rose on Wednesday as traders brushed off a retreat on Wall Street with attention turning to the release later in the day of minutes from the Federal Reserve's most recent policy meeting.

Trading floors have calmed down since the wild volatility that greeted the start of February, which was caused by concerns about the impact of higher US interest rates and Treasury bond yields.

While New York's three main indexes ended in negative territory on Tuesday, Asian dealers were in an upbeat mood, helping the dollar recover from recent losses against the yen and holding its own versus the euro and pound.

In morning trade Hong Kong was up 0.9 per cent, while Tokyo's Nikkei was 0.6 per cent higher by the break.

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Sydney gained 0.1 per cent, Singapore put on 0.4 per cent and Seoul was up 0.3 per cent. Wellington climbed 1.4 per cent and Taipei returned from a week-long Lunar New Year break to jump 2.6 per cent.

Shanghai remained closed for the holidays.

The Fed minutes will be closely pored over for clues about the thoughts of policy board members as US inflation edges up, wages improve and Donald Trump's tax cuts come into play.

Stephen Innes, head of Asia-Pacific trading at Oanda, said: "US equity markets fell overnight on the back of higher US Treasury yields which are providing investors with more income than dividends on the S&P 500 Index."

However, "while the prospect of higher interest rates will keep investors on edge, it's not like we're returning to double-digit levels".

He added that even a rise in key US 10-year yields to 3.25 per cent is "unlikely to kill the equity market rally as the benefits from fiscal stimulus should continue to feed through the markets. Investors are banking on much higher returns from equities than bonds again in 2018".

On oil markets both main contracts edged down on Wednesday after a recent run of gains as the dollar edges slightly higher, while analysts say the output cap led by Opec and Russia is helping to dwindle the global glut that hammered prices in previous years.

AFP

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