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Dollar up on Fed rate talk, Asia markets mostly rise
[HONG KONG] The dollar pushed higher on Thursday after the Federal Reserve upgraded its outlook on the US economy, fuelling talk of a September interest rate hike, while Asian shares were mostly up after a Wall Street rally.
Despite the mood in global markets being a little more upbeat than at the start of the week, oil prices struggled to recover from its latest sell-off.
Tokyo jumped 1.08 per cent, or 219.92 points, to 20,522.83 as the yen weakened against the greenback and top firms including Nintendo reported strong earnings. Sydney rose 0.81 per cent, or 45.3 points, to close at 5,669.5 thanks to a pick-up in iron ore prices.
Hong Kong was flat in late trade and Shanghai gave back early gains to sit 0.70 per cent lower after running up more than three percent on Wednesday.
Seoul dropped 0.91 per cent, or 18.59 points, to 2,019.03, hurt by selling in heavyweight Samsung Electronics after it reported disappointing earnings.
After a two-day policy meeting, the Fed said in a statement that the world's top economy had expanded "moderately" in recent months and the jobs market had strengthened, but it noted continued "soft" business investment and exports.
It also said inflation was below target, though it put much of that down to falling energy prices and to cheaper imports caused by the strong dollar.
While it gave no more clues about its plans for raising interest rates, analysts said the wording suggested September was now a strong possibility for a rate rise.
On Wall Street, the Dow rose 0.69 per cent, the S&P 500 gained 0.73 per cent and the Nasdaq advanced 0.44 per cent. The gains were the second in a row after US stocks suffered a five-day losing streak.
"The Fed statement was similar to the last and it was a very modest upgrade to previous language," said Raiko Shareef, a markets strategist at Bank of New Zealand in Wellington.
"That will make the two following employment reports we get more important, and strong results would support our view of a September liftoff," Shareef told Bloomberg News.
Economist Chris Low of FTN Financial added that minor changes in the language showed that "the past six weeks data pushed the (policy committee) a little closer to raising rates".
"But they are still waiting for more good news before they actually pull the trigger," he said.
The chances of an earlier rate rise lifted the dollar. In Tokyo trade it fetched 124.20 yen, compared with 123.91 yen in New York.
The euro bought US$1.0955 and 136.02 yen against US$1.0990 and 136.19 yen in US trade.
Seoul was dragged down by Samsung, which tumbled 2.85 per cent in morning trade after releasing second-quarter earnings showing net profit dropped 8.0 per cent owing to weak sales of its flagship S6 smartphone.
The firm has now seen its net profit decline for five straight quarters year-on-year, mainly due to heightened competition in an increasingly saturated smartphone market that it had dominated for years.
Shanghai was unable to continue its upward momentum from Wednesday's rally, which came after a three-day sell-off that saw the composite index sink more than 11 per cent - including an 8.48 per cent collapse Monday.
Investors are nervously watching Beijing's handling of the latest market crisis, worried that efforts to provide support - put in place at the start of the month to prevent a meltdown - will not be enough.
In oil trade US benchmark West Texas Intermediate for September delivery eased two cents to US$48.77 and Brent crude for September jumped 19 cents to US$53.57.
Prices rallied Wednesday after data showed an unexpected weekly fall in US crude inventories. The figures provide some respite for dealers after a recent sell-off, although the black gold remains beaten down by fears over a global share glut, a strong dollar, an expected flood of Iranian crude at the end of the year and weak demand.
Gold fetched US$1,083.12 an ounce compared with US$1,096.20 late Wednesday.