Asian Shares mixed; Fed minutes, China PMI in Focus

23 Aug 2012

-- Nikkei down 0.1%, Hang Seng Index up 0.9%, S&P ASX 200 up 0.6%. -- Stronger yen weighs Japanese equities. -- Australia higher on Fed minutes. (updates market levels) By Daniel Inman Asian markets were mixed early on Thursday, as hopes for stimulus out of the U.S. lifted stocks in the region, but a stronger yen weighed on the Japanese market. There was caution ahead of China manufacturing data coming out later in the morning, which will be used to gauge the health of Asia's largest economy. In China, Hong Kong's Hang Seng Index was up 0.9% ahead of the data, as coal and oil stocks led the gains, while the Shanghai Composite was flat. The Hong Kong market was also anticipating Bank of China's results, which is the first of the big four banks to report earnings. Minutes from the U.S. Federal Reserve's most recent meeting showed that many members of the central bank's policy-setting committee were in favor of introducing more stimulus if there is no recovery in economic growth. The minutes were "a reasonably strong statement that they are thinking about QE [Quantitative Easing] and that they are thinking of doing it this year," said Joe Bracken, head of macro strategies at BT Investment Management in Australia, which has $36 billion worth of assets under management. "It was surprising on the positive side, because the market had discounted the Fed launching anything." Hints of stimulus in the U.S. pushed the dollar lower against a range of currencies, which stabilized early Thursday. The euro was at $1.2551 after gaining 0.5% against the dollar overnight, the Australian dollar was at $1.0540, and the U.S. dollar softened against the South Korean won to 1,127. The dollar was at Y78.55, after losing 0.9% against the yen overnight, because when the Fed attempts to push down U.S. bond yields, it reduces the incentive to hold dollars over yen. The stronger yen weighed on the Nikkei, which down 0.1%, though recovering from its earlier losses. "The market is reacting in knee-jerk fashion to the stronger yen, but as long as the dollar holds around the Y78 mark, stock prices should not be adversely affected," said Tatsunori Kawai, chief strategist at kabu.com Securities in Japan. Exporters fell on the firmer currency: Honda Motor lost 1.5% and industrial robotics company Fanuc was 0.2% lower. Troubled electronics company Sharp Corp. advanced 3.9% after a NHK report said the company's creditors are considering providing loans worth more than Y200 billion. The Fed minutes were good for the Australian market, where the S&P ASX 200 gained 0.6%, with the materials sector leading the broad gains. A stronger gold price helped Newcrest Mining go 2.9% higher and Fortescue Metals Group added 2.4% after its annual results met expectations. Another local company to report was Qantas Airways, up 6% as the market was impressed by the company's underlying profit. South Korea's Kospi was up 0.3%, reversing its earlier losses. Gold climbed on Thursday to $1659.30, up 1.3%, in response to the increased hopes of quantitative easing.