Asia: Shares rise but commodities struggle

[HONG KONG] Asian markets advanced on Tuesday, with Tokyo boosted by a weaker yen and Shanghai's recovery continuing, but falling commodity prices fuelled fears about global growth.

With concerns easing about the Greek debt crisis and China's market rout, dealers are now focusing on when the US Federal Reserve will raise interest rates as the US economy gets back on track.

Tokyo rose 0.93 percent, or 191.05 points, to 20,841.97 - close to an 18-year high - and Sydney climbed for a sixth straight session, putting on 0.35 per cent, or 19.8 points, to 5,706.7. Seoul gained 0.50 per cent, or 10.31 points, to 2,083.62.

Shanghai closed up 0.64 per cent, or 25.56 points, at 4,017.67 - ending above the key 4,000 point barrier for the first time since July 1.

Hong Kong added 0.52 per cent, or 131.62 points, to 25,536.43.

Buying was also supported by another positive lead from Wall Street, where the Nasdaq Monday ended at a record high for the third straight session, adding 0.17 percent.

The Dow gained 0.08 per cent and the S&P 500 finished 0.08 percent higher, just short of an all-time high.

On currency markets the dollar hit a five-week high against the yen as investors position for a rate rise widely expected in either September or December.

Last week Fed chief Janet Yellen said she saw a rise before 2016.

At the same time the Bank of Japan and European Central Bank are spending hundreds of billions of dollars on bonds and other assets to support their respective economies, pushing down the value of the yen and euro.

The dollar bought 124.43 yen Tuesday against 124.30 yen in New York.

The euro bought US$1.0825 and 134.61 yen, little changed from US$1.0824 and 134.55 yen in US trading.

"The weaker yen and cheaper oil will have a positive effect on Japanese stocks," said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co in Tokyo.

GOLD SUFFERS

Chinese shares have risen more than 14 per cent since hitting a low on July 8. The decline forced Beijing to introduce a raft of measures to staunch a month-long plunge that saw the Shanghai index fall by about a third, wiping trillions off valuations.

Among the measures were a police crackdown on short-selling and a ban on big shareholders and company executives from selling stock for six months.

"The 4,000 level is a key battlefield for bulls and bears," said Li Jingyuan, general manager of the securities investment department at Shanghai Zhaoyi Asset Management. He added that once the level is breached traders feel more confident to carry on buying.

However, dealers said there are fears that a fall in commodities prices underlines weakness in the global economy.

Gold fetched US$1,104.04 an ounce after falling as low as US$1,072 Monday, its weakest since 2010. The precious metal had been at US$1,144.00 late Friday but has taken a hit owing to the US rate rise talk, which has seen investors rush into the dollar looking for better returns.

And on oil markets US benchmark West Texas Intermediate for August delivery fell 20 cents to US$49.95 a barrel, while Brent crude for September dropped 14 cents to US$56.51 in afternoon trade.

"This commodities rout is a very big concern," Michael McCarthy, a chief strategist at CMC Markets in Sydney, told Bloomberg News.

"There's risk for a further downside. It looks like the overall global growth outlook is continuing to slow." Investors were also keeping an eye on Greece where the government raised taxes and paid billions of euros to its creditors on Monday, as banks reopened just days after the debt-laden country reached a bailout deal with its creditors.

In other markets, Taipei gained 0.34 per cent, or 30.96 points, to 9,005.96.

Taiwan Semiconductor Manufacturing Co rose 1.08 per cent to T$140.5 while MediaTek gained 3.03 per cent to T$357.0.

Wellington added 0.26 per cent, or 14.98 points, to 5,876.91.

Spark was up 1.03 per cent at NZ$2.935 while Warehouse Group was steady at NZ$2.61.

Manila closed 1.15 per cent, or 86.79 points, higher at 7,627.96.

Mall operator SM Prime Holdings rose 1.90 per cent to 21.40 pesos, Ayala Land was up 1.32 per cent at 38.50 pesos and Banco de Oro jumped 1.45 per cent to 105 pesos. Jakarta was closed for a public holiday.

AFP