Asian Tech Stocks Rally; Yen Gains on Fed Minutes

Asian equities were mixed with technology stocks rising after stellar earnings at Internet giant Tencent Holdings Ltd. The yen climbed and the dollar extended declines after Federal Reserve meeting minutes reduced the odds of another U.S. interest rate increase this year.

Shares in Japan and Australia finished lower, while they gained in South Korea. European stock-index futures pointed to a weaker start to the trading day. The dollar fell as base-metal prices in Shanghai and London rallied, with zinc touching 10-year highs. Bond yields tracked a retreat in U.S. yields after the latest Fed minutes showed debate among policy makers about whether higher rates are needed given inflation remains benign. The swaps market sees a reduced chance for a December U.S. interest-rate hike.

The tumult that swept markets in the wake of heightened tensions between the U.S. and North Korea last week has eased, bringing down gauges of equity and bond volatility and repairing most of the damage done to stock markets. Investors continue to keep an eye on Washington where President Donald Trump disbanded two high-profile business advisory councils following the fallout from his response to the weekend violence in Virginia.

Attention will now turn to the European Central Bank, which is due to release minutes of its last policy meeting on Thursday, amid signs the euro-area economy gathered pace in the second quarter. Policy makers have signaled that they are getting closer to phasing out quantitative easing. Meanwhile, Reuters reported that ECB President Mario Draghi won’t deliver a fresh policy message at the Federal Reserve’s annual symposium in Jackson Hole, Wyoming later this month.

In economic news out of Asia, Australian employers added 27,900 jobs in July from June, beating economists’ forecasts of a 20,000 gain. Japan posted a trade surplus for a second consecutive month in July as exports continued to grow, while imports surged again as domestic demand continues to recover.

Earnings at China’s Internet giants will stay in focus. Tencent posted its fastest revenue growth in seven years and record profit that surpassed estimates by 35 percent, sending its U.S.-traded shares up more than 6 percent. Alibaba Group Holding Ltd.’s up next, set to report first-quarter results before the start of New York equity trading on Thursday.

Terminal subscribers can read more on our Markets Live blog.

Here are the main moves in markets:

Stocks

The MSCI Asia Pacific Index added 0.6 percent with a subindex of technology stocks up 1.1 percent.

Japan’s Topix index and Australia’s S&P/ASX 200 Index each closed 0.1 percent lower. South Korea’s Kospi index climbed 0.6 percent. In Hong Kong, the Hang Seng Index fell 0.3 percent even as Tencent jumped 2.8 percent.

Contracts on the Euro Stoxx 50 fell 0.2 percent in early European trading.

Futures on the S&P 500 Index slipped 0.1 percent as of 7:34 a.m. in Tokyo. The underlying gauge finished up 0.1 percent, down from its session high.

The MSCI All-Country World Index increased 0.3 percent on Wednesday.

Currencies

The Bloomberg Dollar Spot Index fell 0.1 percent, extending the 0.4 percent slide on Wednesday.

The yen climbed 0.3 percent to 109.88 per dollar, extending Wednesday’s 0.4 percent advance.

The euro rose 0.1 percent to $1.1773, adding to a 0.3 percent gain on Wednesday.

The Aussie added 0.1 percent to 79.34 U.S. cents, pulling back from the session’s high

after full-time employment dropped in July. The currency surged 1.3 percent after the Fed minutes sent the U.S. dollar lower.

Bonds

The yield on 10-year Treasuries was at 2.23 percent after sliding five basis points overnight.

The 10-year German bund yield fell two basis points to 0.43 percent.

Australian government notes with a similar maturity saw yields slip two basis points to 2.64 percent

Commodities

West Texas Intermediate crude added 0.1 percent to $46.82 a barrel, after falling 1.6 percent on Wednesday.

Gold increased 0.3 percent to $1,287.36 an ounce after rising 0.9 percent Wednesday.

Metals extended a rally spurred by faster global growth and tightening supplies. Zinc soared by its daily limit to 25,975 yuan a ton on the Shanghai Futures Exchange, rising 5 percent to its best mark since October 2007. In London, prices advanced as much as 0.8 percent to $3,145 a ton, a level not seen in almost 10 years. Iron ore futures in Singapore were up 5.7 percent.

Source: Bloomberg