Moneycontrol
Jun 20, 2017 07:20 AM IST | Source: CNBC

Asian stocks gain as dollar strengthens on Fed officials' comments

The Nikkei 225 gained 0.86 percent and South Korea's benchmark Kospi index rose 0.45 percent in early trade.

Asian stocks gain as dollar strengthens on Fed officials' comments

Asian indexes trekked higher in early Tuesday trade as the dollar strengthened following comments from Federal Reserve officials over future interest rate hikes stateside.

The Nikkei 225 gained 0.86 percent and South Korea's benchmark Kospi index rose 0.45 percent in early trade.

Down Under, the S&P/ASX 200 traded 0.05 percent higher.

With inflation soft despite a 16-year low in the US unemployment rate, the Federal Reserve should move only slowly to raise interest rates and trim its bond portfolio, Chicago Fed President Charles Evans said Monday.

The comments from Evans follow remarks on Monday by New York Fed President William Dudley who said inflation should rise as the labor market improved, which would allow the Federal Reserve to proceed with plans to tighten monetary policy. The dollar strengthened and US Treasury yields rose following the news.

The dollar gained against a basket of rival currencies to trade as high as 97.615 overnight. The dollar index last traded at 97.597. Meanwhile, the yen traded 111.72 to the dollar, its lowest level in around three weeks.

Meanwhile, the ratings downgrade of Australia's banks, including the big four, by Moody's Investor Services overnight is not expected to affect their funding costs, Reuters quoted Deutsche Bank analysts as saying. The Moody's downgrade of the banks from AA2 to AA3 aligns with S&P's existing AA- rating, said National Australia Bank Currency Strategist Rodrigo Catril in a morning note.

Shares of Australian banks were mixed in early trade. ANZ edged lower by 0.18 percent and National Australia Bank traded 0.1 percent down, but Commonwealth Bank of Australia climbed 0.22 percent.

The Australian dollar, which initially sold off on the news, traded near overnight lows at $0.7591 at 8:05 a.m. HK/SIN.

Singapore-listed commodity trade Noble Group announced it would be deferring payment on $400 million in Perpetual Capital Securities as it focuses on liquidity.

In energy news, oil prices gained slightly after tumbling to a seven-month low overnight. Brent crude rose 0.19 percent to trade at usd 47 a barrel and US West Texas Intermediate crude gained 0.18 percent to trade at usd 44.28.

Over in Europe, Brexit negotiations began on Monday between the UK and the European Union, with the UK's Brexit Secretary saying he hoped for a "strong and special partnership." Few headlines materialized from the talks.

Economic data expected later in the day includes the Reserve Bank of Australia's minutes due at 9:30 a.m. HK/SIN. The RBA had held cash rates steady earlier this month due to weak growth.

Hong Kong CPI and jobless data for the month of May will be due at 4:30 p.m.

On Wall Street, stocks closed higher on the back of big name tech stocks strengthening.
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