Tokyo stocks made solid gains yesterday on the back of rising oil-linked counters, while elsewhere in the region trade was lacklustre after a weak lead from Wall Street.
The advance on Japan’s main index, which was up 0.7% shortly after the break — snapping two sessions of decline — also came as a halt in the yen’s rally lifted exporters — making them more competitive overseas.
The dollar picked up against the yen yesterday after comments from a senior US central banker suggested an interest rate hike could possibly come as early as next month.
The greenback rose to ¥100.60 from ¥100.30 in New York, where it briefly touched as low as ¥99.54, falling under the 100 level for only the second time this year.
Investors gave a mixed response to China’s approval of plans to link trading between the Shenzhen and Hong Kong stock exchanges, with Shanghai down by mid-morning but Hong Kong gaining ground.
In New York, all three major indices moved off record highs on Tuesday after William Dudley, head of the Federal Reserve’s New York branch, said a rate hike was possible next month and that Wall Street was too “complacent” about the prospect of higher rates over the next year.
On other stock markets, Sydney, Seoul and Taipei were all weaker.
“Considering how much the yen has strengthened, Japanese shares are showing resilience,” Chihiro Ohta, a senior strategist with SMBC Nikko Securities, told Bloomberg News. China’s powerful State Council said on Tuesday that the government had approved plans to link trading between the Shenzhen stock exchange and the Hong Kong market, paving the way for the long-awaited reform.
China launched a landmark “stock connect” between the Hong Kong and Shanghai bourses in late 2014, opening up its closeted share market to the outside world and giving foreign investors access to Chinese companies not quoted elsewhere.
Mainland China’s second stock exchange, in the southern city of Shenzhen, was due to follow last year, but the launch was delayed by a market rout.
Preparations for the launch are expected to be finished in four months’ time but a start date is subject to regulatory approval, the Hong Kong exchange said.
The benchmark Shanghai Composite Index fell 0.2%, while the Shenzhen index added 0.3% and Hong Kong advanced 0.2% yesterday.
Energy stocks got a boost in Asia as the oil price rose above $46 a barrel overnight on a weaker US dollar and Russian hints at efforts to end the global supply glut.
In Tokyo, energy explorer Inpex edged up 5.3%, Sinopec in Hong Kong gained 1.2% and Sydney-listed Oil Search ticked up 2.6%.
BHP Billiton was also up 2.8% after reporting an annual net loss of $6.39bn late Tuesday — its worst-ever result after being hit by the impact of a fatal mine dam disaster in Brazil and weak commodity prices.
“BHP Billiton’s result has helped provide a relatively supportive tone for materials stocks this morning,” said Ric Spooner, chief market analyst at CMC Markets.
“It contained no major surprises with underlying earnings achieving a slight beat on consensus expectations.
The period of major write downs now looks to be behind BHP.
From here on, it will continue to benefit from productivity gains.”
In Tokyo, the Nikkei 225 up 0.7% at 16,710.03 points; Shanghai — Composite down 0.2% at 3,104.085 points and Hong Kong — Hang Seng up 0.2% at 22,961.87 points yesterday.