Asian Shares Lifted by Wall Street Records

An index of Asian shares edged higher on Tuesday, bolstered by another record day on Wall Street, while a resurgent yen helped knock the U.S. dollar index off an 11-year high.

The Australian dollar jumped after the Reserve Bank of Australia held policy steady, confounding investors who had bet it would deliver a back-to-back interest rate cut instead of holding off for a few months to gauge how the economy digested last month’s cut.

“Further easing of policy may be appropriate over the period ahead,” the RBA said in a brief post-meeting statement, keeping the door open for easing at forthcoming meetings.

Financial spreadbetters predicted modest gains at the open for European bourses, with Britain’s FTSE 100 .FTSE seen opening 6 points higher, or 0.1 percent; Germany’s DAX .GDAXI 7 to 8 points higher, or 0.1 percent; and France’s CAC 40 .FCHI 8 to 9 points higher, or 0.2 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added about 0.1 percent.

But Japan’s Nikkei stock average .N225 erased early gains and ended 0.1 percent lower, after the yen rebounded from a three-week low against the greenback touched earlier in the session.

Investors took profits from recent gains to 15-year highs, while Sharp Corp (6753.T) dropped on news that it is planning to seek aid from its main lenders as it expects losses to mount this year.

China stocks tumbled as investor excitement over a weekend interest rate cut waned, with a flood of new initial public offerings (IPO) fanning concerns about tighter liquidity. The Shanghai Composite Index .SSEC fell more than 2 percent.

On Wall Street on Monday, the Dow Jones industrial average .DJI and the S&P 500 .SPX both posted fresh record closing highs, while the Nasdaq Composite .IXIC broke 5,000 for the first time in 15 years.

The Aussie dollar AUD=D4 was last up 0.8 percent at $0.7825 after going as low as $0.7751 earlier in the session as some investors bet that the RBA would cut rates.

The dollar index .DXY climbed as far as 95.516 earlier in the session, its highest since September 2003, but was last down about 0.2 percent on the day at 95.317.

The dollar skidded about 0.4 percent against the yen to 119.69 JPY=, after touching a fresh three-week high of 120.27 earlier on Tuesday. The yen’s ascent came after an adviser to Japan’s government reportedly said the yen’s correction from its past excessive strength is likely complete.

Etsuro Honda, an economic adviser to Japanese Prime Minister Shinzo Abe, told the Wall Street Journal in an interview that dollar/yen may be at the “upper limit of comfort zone.”

The euro gained about 0.1 percent on the day to $1.1195 EUR=.

The dollar’s rise overnight showed the extent to which some investors have begun positioning for the possibility of a near-term rate hike, as it came in spite of a batch of downbeat U.S. data, including another fall in U.S. consumer spending and slower factory activity.

“The market’s relentless appetite for U.S. dollars is impressive considering that the latest economic reports hardens our view that the Federal Reserve will raise interest rates in September and not in June,” Kathy Lien, managing director at BK Asset Management, said in a note to clients.

The main data focus for the market this week will be Friday’s U.S. jobs report for February. Employers are expected to have added 240,000 jobs in the month, according to the median estimate of 100 economists polled by Reuters.

A strong reading is likely to heighten expectations that the Fed will opt to hike interest rates by the middle of this year, and would likely give the greenback a lift.

A sharp selloff in Brent crude LCOc1 overnight kept some investors cautious, despite some retracement on Tuesday.

Brent added more than dollar, or 1.4 percent, to $60.39 a barrel after plunging as much as 5 percent in the previous session. U.S. crude CLc1 rose about 0.7 percent to $49.91.

Spot gold XAU= recovered as the dollar slipped, adding about 0.2 percent to $1,208.65 an ounce after touching a session low of $1,194.90.

Source: Reuters