Asia: Markets edge up on US growth forecast

[HONG KONG] Asian stocks edged up on Thursday on strong US growth forecasts, as traders braced for a series of key economic announcements.

The muted start to trading comes ahead of the US House Republicans' tax announcement and confirmation of President Donald Trump's pick for the new Federal Reserve chair, as well as an important Bank of England meeting.

Investors in Tokyo and Hong Kong built moderately on overnight gains on most world markets, which were boosted as the US central bank delivered a punchy assessment of "strong" economic growth while keeping its key policy interest rate unchanged Wednesday.

Tokyo shares added 0.2 per cent by the break to the previous day's 21-year high, as the yen remained cheap against the dollar and Honda jumped more than four per cent after it raised its annual profit outlook on strong motorcycle sales.

Hong Kong edged up 0.1 per cent but Shanghai shed 0.4 per cent in early trade, dragged down by heavyweight financial shares.

Chinese internet giant Alibaba was due to release its third quarter earnings Thursday, with investors closely watching to see if heavy investment has yielded further rapid revenue growth.

Meanwhile on Wall Street, the world's biggest company Apple was also due to release earnings Thursday.

The Fed, as expected, kept interest rates unchanged as it reported the US was growing at a "solid pace" and was not significantly dented by Hurricanes Harvey and Irma. That statement solidified the view the US central bank is likely to raise interest rates in December.

The Fed decision came as a report estimated private-sector hiring surged to 235,000 jobs in October.

The dollar strengthened on those developments Wednesday, lending support to Asian exports, although some of those gains were pared Thursday amid uncertainty about the prospects of US tax cuts.

Wall Street remained hopeful that Trump's ambitious tax plans - due to be unveiled by House Republicans Thursday - are moving closer to becoming reality, but a delay in the roll-out signalled potential trouble ahead.

The US central bank will remain in focus on Thursday with Mr Trump's announcement of his choice to lead the Federal Reserve.

The White House notified current Fed Governor Jerome Powell on Wednesday that he will be the nominee, replacing current Fed Chair Janet Yellen, according to a congressional source and US media.

The 64-year-old Republican, seen as a continuity candidate, has echoed the administration's views on deregulation but is not seen as likely to tighten interest rates too quickly - which Mr Trump opposes.

Reports of Mr Powell's expected nomination "will support Japanese shares", Okasan Online Securities said in a commentary.

"The possibility of a rapid pace of US rate hikes was reduced" after the report as Powell is seen as holding a policy position close to Yellen, it said.

Elsewhere, the Bank of England is expected on Thursday to deliver its first interest rate increase in more than a decade as it fends off Brexit-induced high inflation.

AFP