TOKYO: Asian stocks swung between gains and losses as investors assess what a U.S. interest-rate increase as soon as next month will mean for global economic growth.
The MSCI Asia Pacific Index added 0.4 percent to 125.89 as of 10:18 a.m. in Hong Kong, after earlier falling as much as 0.2 percent. The measure is up 0.1 percent for the week after three weeks of losses. Minutes of the Federal Reserve’s April meeting released this week indicated policy makers may be readying to raise U.S. interest rates as soon as next month. That sent the odds for a June increase to as high as 33 percent from 4 percent on Monday, though has since eased to a 28 percent chance. Traders see a higher probability for an increase by September, with the likelihood seen at 58 percent.
“There will be no rate hike in June, it’s probably a bit too early,” David Gaud, who helps oversee about $61 billion as a fund manager at Edmond de Rothschild Asset Management, told Bloomberg TV in Hong Kong. “The Fed will further prepare the markets for a hike probably in September and maybe a second one in December. That’s going to create more volatility, but more than anything that’s going to be a positive in the end for the markets.”
It’s been a tumultuous year for investors in Asia-Pacific equities. The regional index began the year with a 14 percent slump through a February low on concern a devaluation of the Chinese yuan would curb global growth and amid prospects for a U.S. rate increase. It then rallied almost 20 percent through this year’s peak in April before beginning the current retreat.
Some Fed policy makers expressed concern that markets were ill-prepared for a rate increase next month, minutes of the central bank’s April meeting showed this week. The document also indicated policy makers’ willingness to raise interest rates in June if the economy continues to improve. New York Fed President William Dudley said Thursday the central bank is moving closer to raising rates at one of its next two meetings and the fact this message is getting through to financial markets is welcome news.
Friday morning kicked off with deal activity in Australia. Papua New Guinea oil and gas producer Oil Search Ltd. agreed to buy InterOil Corp. in a deal valuing the explorer around $2.2 billion. Interoil surged 31 percent in after-hours U.S. trading. Oil Search climbed 0.2 percent in Sydney, after earlier rising as much as 5.5 percent.
Oil headed for a second weekly advance while copper prices led base metals higher, boosting energy producers and raw-material makers in the Asia-Pacific region. BHP Billiton Ltd., the world’s largest mining company, rallied 1.1 percent in Sydney, while Rio Tinto Group gained 1.7 percent.
Japan’s Topix index rose 0.2 percent after earlier falling as much as 0.5 percent, with volume about 15 below its 30-day intraday average. Australia’s S&P/ASX 200 Index climbed 0.4 percent with volume down 19 percent. New Zealand’s S&P/NZX 50 Index slid 0.1 percent. South Korea’s Kospi index was little changed. Singapore’s Straits Times Index added 0.8 percent.
Taiwan’s Taiex Index rose 0.6 percent. Tsai Ing-wen became Taiwan’s first female president on Friday. Tsai advocated Taiwan reducing its reliance on China by joining free trade pacts, and may redouble on efforts to sign on to regional deals such as the U.S.-led Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.
Hong Kong’s Hang Seng Index gained 0.8 percent, while the the Hang Seng China Enterprises Index of mainland firms listed in the city climbed 1.2 percent. The Shanghai Composite rose 0.1 percent.
E-mini futures on the S&P 500 added 0.3 percent. The underlying gauge lost 0.4 percent Thursday, closing at a seven-week low.
