Equity markets in Asia extended overnight gains in the U.S. early Thursday, lifted by expectations of upbeat earnings reports and higher oil prices, though investor caution over central-bank action has capped the upside.
Investors are awaiting central-bank decisions by the Bank of Japan and the European Central Bank, due later in the day. While the banks are widely tipped to stand pat, the focus is on any fresh guidance from the ECB toward tighter monetary policy and from the BOJ on the country’s inflation outlook.
“They are on a path of preparing markets for a withdrawal of stimulus,” said Michael McCarthy, chief market strategist at CMC Markets. But a weaker U.S. dollar has lifted the yen and euro, curtailing the central banks’ ability to sound excessively hawkish, he said. “Their potential for jawboning is low.”
Australia’s S&P/ASX 200
was up 0.4%, helped by the 7.1% surge in oil and gas firm Santos
, after the company raised its output guidance for the year and said it continued to make progress on cutting costs and debt.
Elsewhere in the region, Singapore’s Straits Times Index
and Taiwan’s Taiex
added 0.1% each, while Hong Kong’s Hang Seng Index
was up 0.3% at the open. The gains follow broad gains in U.S. stocks that sent major indexes to a trio of records on Wednesday.
Overnight gains in oil prices to a six-week high, thanks to a U.S. government report showing sharp drawdowns in oil and fuel stockpiles, lifted energy-related stocks across the region. Apart from Santos, Australia’s Oil Search
In Japan, oil giants Inpex Corp.
and Japan Petroleum
rose nearly 1% each, outpacing the Nikkei Stock Average’s
0.2% rise ahead of the BOJ decision.
Shares in Japan were also lifted by data early Thursday that showed Japan’s exports rising 9.7% in June from a year ago, the seventh straight monthly gain, helped by steady demand overseas for semiconductors and related equipment as well as a weaker yen.
But the fall in export values in June suggests that net trade turned into a drag on growth in the second quarter, said Marcel Thieliant, a senior Japan economist at Capital Economics. “Nonetheless, strong gains in industrial production point to another solid GDP print,” he said.
The yen advanced slightly after the data release, adding to gains before the print. The dollar
was last down 0.1%, buying 111.86 yen.
Overnight in the U.S., the WSJ Dollar Index, a broad measure of the currency, ended up 0.1% at 87.00, the second-lowest closing value this year. The measure was down 0.1% more at 86.94 in early Asian trading. The yen and the euro were up 0.1% each against the dollar.
Meanwhile, New Zealand shares bucked the region’s strength, with the NZX 50
down 0.4%, as investors took profit after the index closed at another record high on Wednesday.