TOKYO: Asia markets traded higher on Wednesday, with several major indexes advancing more than 1 percent each, after encouraging reports on the housing market stateside propelled gains in U.S. stocks.
Japan’s Nikkei 225 was up 1.76 percent, with shares receiving an additional boost from a relatively weaker yen against the dollar. Across the Korean Strait, the Kospi advanced 1.06 percent. In Hong Kong, the Hang Seng index was higher by 2.38 percent.
Chinese mainland markets also advanced, with the Shanghai composite up by 0.58 percent and the Shenzhen composite adding 0.95 percent.
Down Under, the benchmark S&P/ASX 200 was up 1.67 percent, led by gains in the heavily-weighted financials subindex, as well as the energy and materials sub-indexes.
U.S. stocks ended higher overnight, with the Dow Jones industrial average closing up 1.22 percent, the S&P 500 higher by 1.37 percent and the Nasdaq composite adding 2 percent.
New home sales for April jumped 16.6 percent to a seasonally adjusted annual rate of 619,000 units in the U.S., the highest level since January 2008 and topping expectations, reported Reuters.
In the currency market, the dollar regained momentum, advancing against most major currencies. The dollar index, which measures the greenback against a basket of currencies, traded at 95.65, compared with its previous close at 95.23. That’s up from the 94 level the index traded at in the previous week.
Kathy Lien, managing director for foreign exchange strategy at BK Asset Management, said the positive home sales data “validated the Federal Reserve’s hawkish monetary policy stance.”
“As more central bankers say that two or more hikes in 2016 is likely, the more investors start to realize that they are underestimating the Fed’s commitment to normalizing monetary policy,” she said.
The Japanese yen weakened against the dollar, with the pair trading at 110.14 as of 9:50 a.m. HK/SIN.
Major Japanese export stocks were higher, with Toyota shares adding 1.64 percent, Nissan up 1.58 percent and Honda gaining 1.93 percent. A weaker yen is a positive for exporters as it increases their overseas revenue when converted into local currency.
Lien added that she expected “the dollar to extend its gains and look for dollar/yen to head towards 112,” as the market continued to price in its expectations for an imminent rate hike from the Fed.
Oil prices advanced in early Asian hours on Wednesday, with global benchmark Brent futures up 1.15 percent to $49.17 as of 10:13 a.m. HK/SIN. U.S. crude futures added 1.28 percent to $49.24.
Overnight, oil prices jumped after data from the American Petroleum Institute showed U.S. crude inventories fell 5.1 million barrels last week, beating expectations from analysts, according to Reuters.
Higher oil prices didn’t boost one commodity currency, the Australian dollar, which was trading at $0.7180 in morning trade.
Angus Nicholson, a market analyst at spreadbetter IG, said a combination of dollar strength and the Reserve Bank of Australia governor Glenn Stevens’ “reaffirmation of the central bank’s commitment to its inflation targeting framework,” weighed on the Aussie. Governor Stevens spoke on Tuesday at the Trans-Tasman Business Circle.
The Chinese yuan traded near levels not seen since early 2011 against the dollar, with the pair at 6.5612. Before market open, the People’s Bank of China set the yuan mid-point at 6.5693, compared to the previous day’s fix at 6.5488.
In company news, Sony shares advanced 6.88 percent after the company released its earnings forecast for the fiscal year ending March 31, 2017. Sony said it expected operating income to come in at 300 billion yen ($2.72 billion) for fiscal 2017, a 2 percent increase from the 294.2 billion yen for the year ended March 31, 2016.
The company said the earthquakes that hit southern Japan in April disrupted operations and prevented them from making the earnings forecast earlier.
In Australia, Wesfarmers shares fell 0.6 percent. The company said in a statement that it will take on impairment charges up to 2.15 billion Australian dollars in fiscal 2016 due to poor market conditions and lower coal prices.
