Asia: Stocks swing after Fed minutes, Japan gains on weaker yen

[SYDNEY] Asian stocks fluctuated after minutes of the Federal Reserve's April meeting showed policy makers discussed raising interest rates as early as next month. Japanese shares rose as the yen weakened.

The MSCI Asia Pacific Index was little changed at 126.59 as of 9:05 am in Tokyo after dropping as much as 0.4 per cent and rising less than 0.1 per cent.

The Fed's statement indicated most policy makers said a rate hike would be appropriate in June if the economy continued to improve. That sent the US dollar up, with the greenback trading one per cent higher against the yen on Wednesday.

Fed Chair Janet Yellen and her colleagues remained split over when those conditions would be met. Traders are now expecting about a one-in-three chance of a hike next month, up from 4 per cent on Monday.

"There is this enormous policy uncertainty," said Randal Jenneke, Sydney-based fund manager at T Rowe Price Group Inc, which oversees about US$765 billion.

"The Fed has changed the goal posts so many times, everyone is confused. No one knows when they're going to raise rates and no one knows what's going to be the key thing to trigger the decision."

The Fed minutes jolted markets that had been swinging around amid uncertainty over the US central bank's intentions. The MSCI Asia Pacific Index fell 4.1 per cent this year through Wednesday, while Japanese shares slumped as the yen gained the second-most among the major currencies.

The Topix index rose 0.9 per cent on Thursday as exporters gained. The yen traded at 110.23 per US dollar after dropping one per cent on Wednesday.

South Korea's Kospi index declined 0.3 per cent.

Australia's S&P/ASX 200 Index rose 0.1 per cent ahead of a monthly jobs report. New Zealand's S&P/NZX 50 Index sank 0.4 per cent.

Futures on the China A50 Index climbed 0.2 per cent in their most recent trading, while those on the Hang Seng Index added 0.5 per cent.

Taiwan's independence-leaning president-elect Tsai Ing-wen takes charge on Friday of an economy that's been contracting year-on-year for three straight quarters. From trade to innovation and talent retention, Ms Tsai will need to avoid the legislative policy paralysis that kept previous governments from turning things around.

The Taiex Index is down 2.1 per cent this year through Wednesday, compared with the MSCI Emerging Markets Index, which is little changed.

Futures on the S&P 500 index rose 0.1 per cent on Thursday. A rally of as much as 0.7 per cent in the underlying measure petered out Wednesday as investors sold stocks that provide high dividend yields after the 10-year Treasury rate spiked as much as 11 basis points.

Financial shares recorded their best performance in a month after JPMorgan Chase & Co, the largest US bank by assets, raised its quarterly dividend.

BLOOMBERG