Asian shares at four-month high, dollar soft after nonchalant Fed

TOKYO: Asian shares inched up to four-month highs while the dollar was finding its feet yesterday after the US Federal Reserve stuck to its mildly upbeat economic view but gave no hint of accelerating rate hikes.

While strong economic data from the United States and elsewhere have underpinned risk assets, uncertainty and concerns over US President Donald Trump’s policies have markets on edge.

“With many of his cabinet members still not approved, including (incoming Treasury Secretary Steven) Mnuchin, Trump’s occasional remarks and tweets are the only guidance markets can get from the new US administration at the moment,” said Shuji Shirota, head of macro strategy group in Tokyo at HSBC.

“For the time being, markets will continue to be driven by what Trump will say. It’s Trump-on, Trump-off, rather than risk-on, risk-off,” he added.

MSCI’s broadest index of AsiaPacific shares outside Japan rose as much as 0.6 per cent at one point to hit its highest level since mid- October, with Seoul shares hitting highs last seen in July 2015.

But gains were not broad-based, with Hong Kong’s Hang Seng Index slipping 0.2 per cent and Singapore shares down 0.5 per cent.

Japan’s Nikkei also slipped 0.3 per cent on the dollar’s fall.

On Wall Street the picture was also mixed. The S&P 500 stabilised after a four-day losing streak, but it would have been in negative territory without a 6.1 per cent rise in Apple following strong earnings.

US shares have been hit by worries that Trump’s tough stance on refugees and immigration could stem inflows of talent to the US labour market and raise geopolitical tensions.

On Wednesday the Federal Reserve held interest rates steady in its first meeting since Trump took office.

While painting a relatively upbeat picture of the US economy, its statement gave no firm signal on the timing of its next rate move as Fed policymakers are still awaiting clarity on the possible impact of Trump’s economic policies. — Reuters