Asia: Stocks, oil jump as dollar sags after Fed

[SINGAPORE] Asian shares edged higher on Friday, oil touched a 2016 high and the US dollar weakened as investors turned more positive on riskier assets after the Federal Reserve's cautious stance on further interest rate increases.

But that optimism looked unlikely to spread to European shares, with financial spreadbetters expecting Britain's FTSE 100 to open little changed, Germany's DAX to start the day as much as 0.1-per cent lower and France's CAC 40 to begin down about 0.2 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 per cent, entering positive territory for the year for the first time. It is up 2.3 per cent this week, and has surged 10.4 per cent this month.

The Hang Seng index was up 0.6 per cent, heading for a weekly rise of 3.6 per cent. China's Shanghai Composite index and CSI 300 climbed about 1.9 per cent each, and were set for gains of about 6.4 per cent for the week.

Chinese home prices rose at their fastest clip in almost two years in February thanks to red-hot demand in big cities. Still, risks of overheating in some places combined with weak growth in smaller cities threaten to put more stress on an already slowing economy.

Japanese shares, however, bucked the trend as the dollar's fall against the yen is seen hurting the country's exporters, with the Nikkei closing down 1.3 per cent for a weekly decline also of 1.3 per cent.

The broader gains echoed a recovery on Wall Street, where the S&P 500 Index gained 0.66 per cent overnight to close at its highest since Dec. 31, led by the materials and energy sectors.

The rallies in commodities and equities were spurred by Wednesday's Fed review when policymakers took a more cautious stance on future US interest rate increases.

"We have got an important week out of the way from a macro data perspective, and not only have we come out of it unscathed, we are seemingly in a stronger place than where we started the week," said Ben Le Brun, market analyst at online brokerage OptionsXpress in Sydney.

"We have heard from central banks in all corners of the globe now and the liquidity party rolls on with the potential for more to come."

The benign rate environment, as well as optimism major producers would reach a deal to freeze output, proved a boon for oil.

Opec kingpin Saudi Arabia and non-Opec producers led by Russia will meet on April 17 in the Qatar capital Doha, aiming for the first global supply deal in 15 years.

After surging more than 10 per cent over the prior two sessions, US oil futures advanced to US$40.55, the highest level since Dec 4. They were last trading at US$40.25, on track for a 4.6-per cent increase for the week, their fifth straight week of gains and longest winning streak in about a year.

Brent crude held close to its three-month high of US$41.60 reached in the previous session and again on Friday. It's headed for a 3-per cent gain for the week.

Oil's rally has also been aided by a weakening dollar, triggered by the Fed's cautious approach to raising rates.

The dollar's index against a basket of six major currencies on Friday touched a five-month low of 94.578, before edging up to 94.825.

The euro retreated slightly from the five-week high of US$1.1342 it hit on Thursday, last fetching US$1.1310.

The yen was trading at 111.48, after climbing to 110.67 to the dollar on Thursday, the highest since October 2014.

The Chinese yuan firmed sharply against the dollar to reach a 2016 high, after the People's Bank of China set the midpoint rate at 6.4628 per dollar prior to market open, compared with the previous fix of 6.4961, the biggest daily rise since November.

The spot market opened at 6.4615 and hit an intraday high of 6.4559, its firmest since late December, before easing to 6.4669, still stronger than the previous close of 6.4755.

Even the British pound, which has been dogged by worries about "Brexit" from the European Union, retreated only 0.2 per cent to $1.4468 from Thursday's one-month high of US$1.4504.

The Australian dollar shot up to US$0.7681, its highest since July, helped by a recovery in commodity prices. It was last trading at US$0.7654.

Copper advanced to a 4-1/2-month high of US$5,126 a tonne, and was last trading up 1 per cent at US$5,118. Silver too jumped to a 4-1/2-month high of US$16.111 per ounce, before falling back slightly to US$16.08.

REUTERS