Asia: Markets track Wall St up, US jobs in focus

[HONG KONG] Asian markets rose on Tuesday, with Tokyo recovering from initial losses as expectations of a US interest rate hike and talk of more Japanese monetary easing pushed the yen down against the US dollar.

After Monday's sell-off across most markets, fuelled by the prospect of higher US borrowing costs, investors returned to buying, buoyed by a rally on Wall Street as another batch of data indicated improvement in the world's top economy.

Bets on a rate hike this year have soared after Federal Reserve boss Janet Yellen last week said at the Jackson Hole symposium of central bankers the "the case for an increase in the federal funds rate has strengthened in recent months".

Attention now turns to the release next Friday of the closely watched jobs report, which will be used as a guide in judging whether the bank will move sooner than later.

"Without question, jobs day is always a monthly highlight, but given the Federal Reserve board's tilt at Jackson Hole, it plainly appears it will take a big surprise to derail a 2016 Fed hike expectation at this point," Stephen Innes, senior trader at Oanda, said in a note.

"Investor odds of lift-off are hovering near 70 per cent for December and Friday's jobs data will offer more information about the probability of a hike in September than anything else."

In morning trade the US dollar rose to 102.14 yen from 101.88 yen in New York, with the Japanese unit also dragged by comments from the country's top central banker suggesting a further loosening of monetary policy by Tokyo.

The weaker yen helped Tokyo stocks go into the break slightly higher, having retreated on profit-taking at the open. The Nikkei soared more than two per cent on Monday.

Hong Kong rose 0.5 per cent, Shanghai added 0.1 per cent, Sydney gained 0.5 per cent and Seoul rallied 0.8 per cent. There were also gains in Singapore, Taipei and Wellington.

Shares in New York ended well up after the Commerce Department reported US consumer spending saw a healthy rise in June, indicating third-quarter economic growth will be strong.

"The rate hike to some extent is priced in," Logan Best, vice president for securities trading at INTL FCStone Financial told Bloomberg News.

"There's a good case to be made that any kind of US rate hike would give weakness to the yen and that would give a tailwind to the Nikkei. The rest of the Asian markets won't be impacted as dramatically as Japan as they are not as currency-driven."

AFP