Asia report: Markets broadly positive after Fed minutes

Asian stock markets closed in a mixed state on Thursday, with Hong Kong leading the gains, as investors digested the latest minutes from the US Federal Reserve overnight.

In Japan, the Nikkei 225 was down 0.07% at 29,708.98, as the yen strengthened 0.27% against the dollar to last trade at JPY 109.55.

Of the major components on the benchmark index, technology giant SoftBank Group was flat, while robotics specialist Fanuc rose 1.12% and Uniqlo owner Fast Retailing was ahead 1.66%.

The broader Topix index lost 0.79% to end the session at 1,951.86.

On the mainland, the Shanghai Composite eked out gains of 0.08% to 3,482.55, and the smaller, technology-centric Shenzhen Composite was 0.01% weaker at 2,257.95.

South Korea’s Kospi was up 0.19% at 3,143.26, while the Hang Seng Index in Hong Kong rose 1.16% to 29,008.07.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics down 1.05%, while SK Hynix was ahead 0.35%.

Minutes from the Federal Open Market Committee’s most recent meeting were released in the US overnight, with officials signalling that the central bank’s easy policy would remain until stronger inflation and employment numbers were evident.

The FOMC noted that the Fed’s $120bn in monthly bond purchasing was providing the American economy with “substantial support”, and indicated that while the economy was heading in the right direction, there was still much progress to be made.

“Participants noted that it would likely be some time until substantial further progress toward the committee’s maximum-employment and price-stability goals would be realised and that, consistent with the committee’s outcome-based guidance, asset purchases would continue at least at the current pace until then,” the minutes read.

The inclusion of the term “outcome-based guidance” signalled a shift in policy for the Fed, which had previously indicated that it would move its policy based on inflation expectations.

FOMC members agreed that any change to the bank’s policy “should be based primarily on observed outcomes, rather than forecasts,” according to the minutes.

IG chief market analyst Chris Beauchamp said there was a “positive feeling” across most markets following the “broadly positive” session for Asia.

“The latest set of Fed minutes delivered yet another reminder of Jerome Powell’s determination to let the US economy run hot rather than move too early on rate rises, and this dawning realisation has been reflected in the strength of growth stocks such as those of the Nasdaq, which have made up plenty of lost ground in recent weeks as the shift from growth to value goes into reverse,” he said.

“Still, the ‘steady as she goes’ mantra from the Fed is likely to be positive for most parts of the market, and even banks will benefit from the rebounding global economy, even if their margins remain squeezed thanks to low interest rates.”

Oil prices were lower at the end of the Asian day, with Brent crude last down 0.35% at $62.94 per barrel, and West Texas Intermediate off 0.6% at $59.41.

In Australia, the S&P/ASX 200 was ahead 1.02% to 6,998.80, after Sydney’s benchmark hit the 7,000 point mark for the first time in more than a year earlier in the session.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was 1.16% firmer at 12,632.60, with specialist dairy exporter A2 Milk rising 3.9%, climbing back from a three-year low in the previous session.

The down under dollars were both stronger on the greenback, with the Aussie ahead 0.25% at AUD 1.3104, and the Kiwi advancing 0.21% to NZD 1.4229.